U.S. Export Policy Toward the PRC
The two principal statutes that govern United States export controls are the Export Administration Act of 1979, as amended, which controls "dual-use" items and is administered by the Department of Commerce, and the Arms Export Control Act, which controls munitions items and is administered by the Department of State. The last major changes to the Export Administration Act were included in the Export Administration Amendments Act of 1985, and in the Omnibus Trade and Competitiveness Act of 1988.
Since the last extension of the Export Administration Act expired on August 20, 1994, the regulations issued under that Act have been maintained in effect under the International Emergency Powers Act by Executive Order. Another Executive Order, issued in 1995, established new procedures and deadlines for processing Commerce Department export license applications.
Prior to the 1995 Executive Order, decisions on export applications that were referred to other agencies were made by consensus. The 1995 Executive Order directed the Commerce Department to send all applications to the Departments of Defense, State, and Energy and the Arms Control and Disarmament Agency for review. It also shortened the maximum processing time from 120 to 90 days. The 1995 Executive Order also revised the Advisory Committee on Export Policy structure to resolve disagreements among the agencies regarding licensing decisions.
Until its dissolution in March 1994, the Coordinating Committee on Multilateral Export Controls (COCOM) was the primary multinational export control organization through which the United States and the other 16 member countries controlled the export of items for security purposes. COCOM was created in 1949 by the United States and the other NATO countries, excluding Iceland and Spain, plus Japan. Later, Spain and Australia joined COCOM. COCOM-proscribed countries included the Soviet Union, other Warsaw Pact nations, and the People╠s Republic of China. Under COCOM, member countries allowed other member countries to veto their export cases that required COCOM approval.
In late 1993, the COCOM member countries agreed with the U.S. proposal to terminate COCOM and replace it with a new multilateral mechanism. The COCOM members agreed in early 1994 to continue the COCOM controls on a "national discretion" basis after the dissolution of COCOM until a new multilateral mechanism was established.
Almost two and one-half years after the dissolution of COCOM, a new multinational organization, called the "Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies," became effective in September 1996. The 33 member countries implement the Wassenaar list of controlled items to countries of concern by "national discretion." The countries of concern are Iran, Iraq, North Korea, and Libya. In addition to the Wassenaar Arrangement, the United States currently participates in three other multilateral export control regimes: the Australia Group, the Missile Technology Control Regime, and the Nuclear Suppliers Group. The items controlled under these latter three regimes are considered to be under foreign policy controls.
Beginning in 1981, the United States and COCOM members gave the PRC access to higher levels of technology compared with the Soviet Union. This policy of differentiation continued until the Tiananmen Square massacre on June 4, 1989. After Tiananmen, COCOM members did not liberalize controls on any additional items specifically for export to the PRC.
Congress passed sanctions against the PRC in response to Tiananmen, including the Foreign Relations Authorization Act for Fiscal Years 1990 and 1991, which, among other things, required a presidential "national interest" determination, or waiver, for the export of a U.S.-manufactured commercial communications satellite for launch on a PRC rocket. There have been 13 such presidential "national interest" determinations pursuant to the Tiananmen sanctions legislation.
Although the Administration transferred the licensing jurisdiction for commercial satellites from State to Commerce by actions in 1992 and 1996, Congress moved the jurisdiction back to State in the National Defense Authorization Act for Fiscal Year 1999 due to technology transfer concerns.
Since early 1994, the United States has dramatically liberalized Commerce Department export controls on items controlled for national security purposes, which has reduced licensing activity by over 55 percent since Fiscal Year 1993. These export control liberalizations have affected computers, semiconductors, semiconductor manufacturing equipment, telecommunications equipment, oscilloscopes, and other commodities.
In the National Defense Authorization Act for Fiscal Year 1998, Congress imposed several restrictions on the export of high performance computers to countries posing proliferation, diversion, or other security risks, including the PRC.
Statutory and Regulatory Controls:
The Export of Our Militarily Sensitive Technology
This chapter provides a brief explanation of the nature and sources of U.S. export controls. It examines the evolution of current export policy regarding the People╠s Republic of China and the provisions of the relevant laws, regulations, and policies applying to the categories of exports that are the primary subjects of the Report:
- Commercial communications satellites
- High performance computers
- Machine tools
The two principal statutes that govern U.S. export controls are: (1) the Export Administration Act of 1979,1 as amended, which controls "dual-use" items and is administered by the Department of Commerce; and (2) the Arms Export Control Act,2 which controls munitions items and is administered by the Department of State. In addition, exports of certain other items are governed by other statutes administered by other U.S. Government agencies, including the Office of Foreign Assets Control of the Department of the Treasury, the Nuclear Regulatory Commission, and the Department of Energy.
Export Administration Act
Export controls in the United States date back to before World War II, when restrictions on exports were imposed to ensure that adequate supplies of commodities would be available to meet wartime needs. After the war, export controls were continued with the enactment of the Export Control Act of 1949 in response to the post-war shortage of many commodities and to the political situation between the United States and the Soviet Union.
Under the Export Control Act of 1949, exports from the United States to the Soviet Union and other Communist countries were controlled based on their military significance. In addition, the Act established a "short supply" export control program to deal with the post-war worldwide shortage of many goods.
The Export Control Act of 1949 continued in effect for 20 years. It was replaced effective January 1970 by the Export Administration Act of 1969 (the 1969 Act). In October 1979, the Export Administration Act of 1979 (the 1979 Act) replaced the 1969 Act. The 1979 Act was later amended by the Export Administration Amendments Act of 1981 and the Export Administration Amendments Act of 1985. Certain revisions to the 1979 Act were included also in the Omnibus Trade and Competitiveness Act of 1988.
Due to the inability of Congress and the Executive branch to reconcile conflicting views regarding export control policy, the Export Administration Act of 1979 was allowed to expire without replacement on September 30, 1990. At that time, the provisions of the 1979 Act were maintained in force by President Bush under the International Emergency Economic Powers Act,3 as implemented through Executive Order 12730 (Continuation of Export Control Regulations, September 30, 1990).
Also, there have been two brief extensions to the 1979 Act in recent years. Public Law 103-10 extended the 1979 Act from March 27, 1993 until June 30, 1994, and Public Law 103-277 extended it again from July 5, 1994 until August 20, 1994.4 Although a number of bills to revise and extend the 1979 Act on a more permanent basis have been introduced in Congress since 1990, an amendment bill or an extension bill has not been passed by both Houses of Congress since July 1994.
Since the last extension of the 1979 Act expired on August 20, 1994, the Export Administration Regulations issued under the 1979 Act have been maintained under the International Emergency Economic Powers Act by Executive Order 12924 (August 19, 1994).
The Export Administration Act of 1979, as amended, provides "authority to regulate exports, to improve the efficiency of export regulation, and to minimize interference with the ability to engage in commerce." The 1979 Act authorizes export controls to be used only after full consideration of the impact on the economy of the United States and only to the extent necessary:
(A) to restrict the export of goods and technology which would make a significant contribution to the military potential of any other country or combination of countries which would prove detrimental to the national security of the United States;
(B) to restrict the export of goods and technology where necessary to further significantly the foreign policy of the United States or to fulfill its declared international obligations; and
(C) to restrict the export of goods where necessary to protect the domestic economy from the excessive drain of scarce materials and to reduce the serious inflationary impact of foreign demand.5
These three categories of permissible restrictions through export controls are discussed in the 1979 Act in separate sections. Section 5 of the 1979 Act deals with national security controls; section 6 with foreign policy controls; and section 7 with short supply controls.6
National Security Controls
National security export controls are established on the export and re-export of strategic commodities and technical data to prevent the diversion of such items to countries of concern. The United States pursues this objective through multilateral means when possible.
Until its demise in March 1994, the multilateral forum for controls on exports to controlled countries was the Coordinating Committee on Multilateral Export Controls (COCOM). The United States currently cooperates in the area of dual-use national security export controls with 32 other countries that participate in the Wassenaar Arrangement.
Section 5(b) of the 1979 Act requires the President to establish a list of "controlled countries" for national security purposes.7 The controlled countries currently are: Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia, Cuba, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Laos, Latvia, Lithuania, Moldova, Mongolia, North Korea, the People╠s Republic of China, Romania, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.8
Foreign Policy Controls
Foreign policy export controls are imposed for a number of reasons in furtherance of the foreign policy of the United States.9 Such reasons include:
- Crime control
- Regional stability
- Chemical and biological weapons nonproliferation
- Missile technology
- Nuclear nonproliferation10
Items controlled pursuant to the three other current multilateral control regimes █ the Australia Group, the Missile Technology Control Regime, and the Nuclear Suppliers Group █ are under foreign policy controls, rather than national security controls. The exception occurs if the item is also under national security controls pursuant to the Wassenaar Arrangement or under unilateral U.S. national security controls.
Section 6(a)(3) of the 1979 Act requires foreign policy controls to expire annually, unless extended.11 Foreign policy controls may not be extended unless the President has submitted a report to Congress in accordance with section 6(f) of the 1979 Act.12
Short Supply Controls
If a commodity is in short supply, export controls may be imposed under section 7 of the 1979 Act.13 Section 7 authorizes the President to prohibit or curtail the export of goods subject to the jurisdiction of the United States where necessary to protect the domestic economy from the excessive drain of scarce materials and to reduce the serious inflationary impact of foreign demand.14
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