Clinton Administration Strategic Trade and Non-Proliferation Control
Agenda
PREPARED STATEMENT OF UNDER SECRETARY WILLIAM A. REINSCH
PROLIFERATION AND U.S. EXPORT CONTROLS
HEARING
before the
SUBCOMMITTEE ON INTERNATIONAL SECURITY,
PROLIFERATION, AND FEDERAL SERVICES
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
JUNE 11, 1997
Introduction
I am pleased to be here today to discuss the Clinton
Administration's strategic trade control program and to explain how it
addresses the proliferation and other security threats we face in an
era of major geopolitical transformation. The President considers an
effective strategic trade control program to be a critical element of
our overall national security posture, and he has directed us to
constantly update our system so that it focuses on the new threats we
face today.
Since the end of the Cold War, crafting export control policy has
become more difficult because the world is more complex and the battle
lines between competing interests less defined. The Cold War, as long
and costly as it was, had a certain elegant simplicity. The United
States and its allies had a clear enemy, and we largely agreed on how
it should be contained. Economic sacrifice was often asked and usually
made by countries and companies in the name of containment, and that
worked.
Now that familiar structure has been replaced by less defined and
more ambiguous threats no longer confined to a handful of relatively
predictable actors. The immediate threats are now terrorism and the
proliferation of weapons of mass destruction to a handful of smaller,
geographically diverse rogue states.
At the same time, the rapid spread of advanced technology in a
globalizing economy has made critical items widely available, and it
has greatly increased the number of nations capable of producing
advanced technology. As a result, the United States does not have a
monopoly on these items, if it ever did, and it has become harder to
reach international consensus on what threats we face and harder to
enforce any agreements we do reach. For many nations, economic
objectives are now paramount as they seek to penetrate new markets.
Yesterday's adversaries are today's customers, and yesterday's allies
are today's competitors.
Even when a policy is clear, our ability to implement it is not.
The world abhors chemical and biological weapons, for example, but they
can be produced with forty-year-old technologies using feedstocks and
equipment found in hotel kitchens, breweries, universities and even
high schools around the world. Building a nuclear weapon does not
require sophisticated computers. The Administration's response to these
changed circumstances includes basing its program on four major
cornerstones:
(1) Reforming the export licensing process so that all
relevant agencies can bring their expertise to the table in a
timely manner. This allows for comprehensive interagency review
of sensitive transactions while ensuring that the process does
not put U.S. exporters at a disadvantage.
(2) Streamlining controls so they focus on items that pose
the greatest threat to our security.
(3) Clarifying our regulatory regime so that exporters can
better understand their obligations and improve their internal
compliance programs.
(4) Strengthening multilateral control systems.
Principal Accomplishments
With respect to process reform, we have, through Executive Order,
revamped the licensing process so that all relevant agencies can review
all export license applications, if they wish. In return for that
expansion of review authority, the other agencies have committed to
Commerce to conduct their reviews within strict time limits, to provide
a statutory or regulatory basis for their views, and to participate in
a dispute settlement process at appropriate political levels.
Thus far, this system appears to be working. Agencies are taking
their responsibilities seriously, and processing times are down, except
for licenses that formerly were not reviewed by other agencies.
Commerce has sought and will continue to seek delegations of authority
from the other agencies narrowing the scope of licenses they wish to
see.
It is important to note that some 96 per cent of the applications
we review are resolved by interagency consensus at the working level.
Those where there are differences of opinion are by far the minority of
what we consider, and they are worked out in the dispute settlement
process I referred to. Thus far all specific license disputes have been
settled and have not had to be escalated beyond the assistant secretary
level.
With respect to streamlining, we have updated controls on high
performance computers, semiconductors and semiconductor manufacturing
equipment, Beta-test software, telecommunications equipment, and
chemical mixtures, among others. These changes reflect rapid
technological advances that have made previously controlled items
``old'' technology widely available from numerous foreign sources.
For example, in 1992 we treated a computer capable of running at
195 Million Theoretical Operations per Second (MTOPS) as a
supercomputer subject to strict controls. Today, personal computers
that exceed this level of performance are being sold for less than
$2000 at retail stores such as Best Buy and Radio Shack and through
mail order catalogues.
When President Clinton took office he was urged by Congressional
leaders of both parties to make long overdue reforms in this area, and
I believe our policy has been a model of good government decision
making. The President's 1995 decision was the result of a joint
interagency recommendation based on work that various agencies,
including the Department of Defense, did internally, as well as a
private sector study. The studies came to similar conclusions--that
advances in computing technology were making ever-higher performing
computers widely available internationally to the point where controls
on them would be ineffective. In addition, they concluded that the
level of computer power needed for a number of activities, including
nuclear weapons development, was already widely available abroad. Other
functions, which we wanted to protect, required performance levels well
above the levels the President set.
It is also worth noting that none of these studies took into
account the rapid development of semiconductor technology that has
permitted significant upgrading of existing machines by adding
processors as well as parallel processing--the linking together of many
smaller computers to achieve the same effect as a much larger machine.
Both of these developments have had an enormous impact on making high
performance computers essentially commodity products. In 1996, for
example, the average performance level for a multiple processor was
6923 MTOPS, forecast to rise to well over 10,000 this year. The average
level for a single processor this year is 655 MTOPS, forecast to rise
to 1135 next year.
Our regulations prohibit the export under a license exception of
computers that the exporter knows will be used to enhance computational
power above the eligibility limit allowed for particular countries.
Beyond that, controlling computers today with complete effectiveness
would really mean individually licensing computers down to the level of
those in your office, which would be absurd administratively and
disastrous economically.
The President's policy is a reflection of the reality of computer
technology today--it is available abroad and is rapidly increasing in
power and speed. Controls on all but the highest levels have limited
utility, and efforts to control at lower levels will not only be
unsuccessful, they will limit our ability to widely disseminate
American standards and software and damage our companies economically.
There has already been considerable consolidation within this industry,
and these companies depend on exports for their survival.
In the area of regulatory reform, for the first time in over 40
years, we clarified and simplified the Export Administration
Regulations through a comprehensive revision and reorganization, making
them more user-friendly and easier to enforce. As a result, exporters
have a better understanding of their obligations. All of this has been
done in accordance with the goals set by the Trade Promotion
Coordinating Committee (TPCC) in 1993.
With respect to multilateral cooperation, the Administration has
worked hard to establish the Wassenaar Arrangement, which deals with
multilateral controls on exports of conventional arms and sensitive
dual use equipment. This is a particularly important development as we
transition from East-West Cold War controls to a regime that focuses
upon transfers of equipment and technology that could enhance
conventional military capabilities in destabilizing ways or increase
the access of rogue nations to weapons of mass destruction or the means
to deliver them. We continue to work in Wassenaar to build consensus
with our new partners on strategic controls and sales of military
equipment.
The Administration has also worked to strengthen other multilateral
nonproliferation regimes such as the Australia Group, the Missile
Technology Control Regime and the Nuclear Suppliers Group by further
harmonizing implementation procedures and expanding membership when
possible. These actions not only advance our non-proliferation
objectives but also enhance U.S. exporters' ability to engage in
legitimate trade and compete worldwide on a level playing field.
Finally, we have worked with many of the newly independent states of
the former USSR and Central and in Eastern Europe to help them develop
effective export control systems. These initiatives are particularly
important since many of these countries possess strong technical
capabilities to support weapons proliferation programs. It is clearly
in our national interest to work closely with them as they develop the
legal, regulatory, administrative and enforcement capabilities they
need to control sensitive exports.
In all of these initiatives BXA's enforcement program plays a key
role in protecting our national security and foreign policy interests,
particularly as we focus more on specific end-users and end- uses, and
Congress has supported these efforts through additional funds. Through
our nonproliferation, counter terrorism, and national security export
enforcement programs, we have conducted hundreds of investigations over
the last four and a half years. These have led to the criminal
prosecution of persons who illegally exported zirconium for Iraqi
munitions, unlicensed equipment for India's missile program, brokerage
services for Iraqi rocket fuel, and gas masks to suspected Aum
Shinrikyo terrorists in Japan, just to name a few. These investigations
also included the first civil charges and penalties for alleged
unlicensed exports of biotoxins which are controlled to prevent
proliferation. Just two weeks ago we executed a search warrant on a
firm that apparently shipped software for integrated circuit design to
China without the proper license.
BXA prohibits exports of items that would make material
contributions to proliferation projects abroad, regardless of whether
such items are specifically listed on the Commerce Control List in the
Export Administration Regulations (EAR). Under the Enhanced
Proliferation Control Initiative (EPCI) provisions of the EAR an
exporter must apply for a license when he or she knows or is informed
by BXA that the end use of an item may be destined for a project or
activity of proliferation concern. In addition, the EAR prohibits any
US person from supporting proliferation projects in any way--even when
there are no U.S. products or no export transactions involved. For
example, following an investigation by Commerce, Customs and FBI, a
Long Island resident pled guilty to violating the EPCI provisions of
the EAR in that he brokered the sale of Chinese-origin ammonium
perchlorate, a rocket fuel ingredient, to Iraq. The shipment was
stopped. This ``catch-all'' control regime is comprehensive and
provides an important underpinning to our overall strategic trade
control program.
Future Trends
Chemical Weapons Convention
The Chemical Weapons Convention represents a critical step forward
in our effort to counter the proliferation of weapons of mass
destruction by establishing an international norm whereby nations agree
to ban an entire class of weapons. BXA will focus on two major areas--
obtaining data declarations from about 2000 non-governmental plant
sites and coordinating international inspections of those facilities.
Our objective is to ensure compliance with U.S. treaty obligations in a
manner that minimizes costs of compliance for US industry and maximizes
protection of confidential business information.
Further Export Control Liberalizations Will Be Limited
We are down now to less than 9,000 licenses annually, and,
increasingly, they are limited to items that are multilaterally
controlled or items that are controlled to terrorist or other rogue
states where our policy is unlikely to change in the short run.
Accordingly, we are not likely to see many dramatic control list
modifications in the near term. Nevertheless, we have an ongoing need
to keep our controls up to date with advances in technology and
spreading foreign availability. In sectors like electronics, where
product life cycles are short, we need to review our policies regularly
to make sure we are not continuing to control old generation items that
are now widely available from other sources.
I know that at least two nations are of particular interest to this
Committee with respect to our export control efforts--Russia and China.
Let me comment briefly on each.
Russia
Russia is continuing to develop its own export control system and
is in the early stages of participating in international export control
regimes. It is a member of Wassenaar and just signed the NATO-Russia
Founding Act which provides a framework for a new substantive
relationship between NATO and Russia. It is a party to major non-
proliferation treaties and agreements. It has signed but not yet
ratified the CWC, as the Russian Parliament still has the CWC before
it. BXA is active in providing direct training and support to working
with Russian (and NIS) trade and export control officials under our
Nonproliferation Export Control Cooperation program. We are encouraged
by these developments and hopeful that they will enable us to work out
problems in a cooperative way, including cases of diversion or illegal
purchases. At the same time, as Mr. Einhorn reported to this Committee
last week, although Russian policies with respect to the development
and export of weapons of mass destruction are encouraging, actual
events from time to time are not consistent with those policies. Until
we see greater consistency between Russian policy and practice,
including a Russian export control system that is more reliable and
fully harmonized with our own and that of our other Wassenaar partners,
we will continue to maintain appropriate controls on exports to Russia.
China
Let me close by briefly addressing our licensing policy toward
China. The Administration policy toward China is one of constructive
engagement. We seek to engage with China to strengthen cooperation in
areas where we agree and resolve differences where we do not. Our
overall goal is to encourage China to become integrated into the worls
system and to meet international norms of behavior, in nonproliferation
and export controls, as well as other areas. We believe that expanding
trade, business, academic, and government contacts with China is
supportive of this goal.
The Administration rejects the view, held by some of our critics,
that China is an enemy that must be contained. Our export control
policy toward China seeks to support our engagement strategy and
creation of higher-paying, export-based jobs in the U.S., while denying
licenses for items whose export would pose significant national
security risks to the U.S. For this reason the vast majority of U.S.
exports to China proceed with no objections by the U.S. Government.
However, we scrutinize carefully exports which might raise national
security concerns. We also continue to maintain Tiananmen sanctions,
which limit the items that can be licensed for China. Where appropriate
we impose sanctions on Chinese entities for proliferation or other
activities, consistent with U.S. laws.
Conclusion
The Clinton Administration is proud of its strategic trade and non-
proliferation record. We have developed an effective interagency
process that facilitates legitimate trade while restricting transfers
that are inimical to our national interests. We have strengthened our
enforcement capabilities, and we have worked effectively with the
business community to enlist their support for our control initiatives.
In the years ahead, we will continue our efforts to work closely with
the Congress so that we can present a united front to the world
community on nonproliferation and counter-terrorism.
|
NEWSLETTER
|
|
Join the GlobalSecurity.org mailing list
|
|
|
