09 March 2004
U.S. Says Export Controls Need Not Block Technology Transfer
But countering threat of proliferation is equally important, State's Maggi says
Export controls on missile technology unmanned aerial vehicles (UAV) should not prevent the United States from providing appropriate weapon systems to allies and friends, a Department of State official says.
In March 9 testimony before a House of Representatives subcommittee, Robert Maggi, director of the defense trade controls directorate (DDTC), acknowledged the threat of cruise missiles and UAVs falling into the hands of rogue states or terrorist groups. But he said that the biggest threat of proliferation does not come from the United States and its allies, but rather from other countries that produce UAVs domestically.
Maggi said that much of the proliferation that has occurred so far has posed a limited threat to the United States because the vast majority of cruise missiles and UAVs in the inventory of "problem" countries are short-range models with limited payload capacity.
Nevertheless, the Bush administration has taken steps to counter the emerging threat that include reviewing the goods and services that require State Department export licenses and working with allies on adding new controls to international control arrangements.
The hearing was called following a General Accounting Office (GAO) report that pointed to gaps in export license reviews and post-shipment monitoring.
GAO said that U.S. export control authorities find it increasingly difficult to limit or track unlisted dual-use items -- items that can be used for both civilian and military purposes -- that can be acquired without an export license. It said that the current export control regime enables U.S. companies to divert certain dual-use items to other than licensed and specified users or countries, and found that the Commerce, Defense and State departments were rarely using their programs to verify compliance with conditions placed on the use of cruise missile, UAVs or related technology exports.
GAO recommended that the Commerce Department reassess the adequacy of its export controls in regard to entities other than governments and come up with improvements in the current regime. It also recommended that all three departments assess cruise missile, UAV and related technology transfers to see if U.S. exporters and foreign end users comply with sale-related conditions.
The report said that, while the Commerce and Defense departments agreed with GAO recommendations, the State Department said it would pay special attention to the need for more checks rather than conduct a full assessment as recommended.
Maggi said that the GAO report focused on only one of the tools -- post-shipment checks -- used by the department to mitigate the risks of defense exports being diverted. He said that other controls such as a licensing process and "extensive" compliance and enforcement activities have been recently enhanced.
Maggi said that GAO has found no evidence of misuse or diversion of UAV or missile-related technologies authorized for exports by the State Department, which he said "speaks volumes" about the effectiveness of the current control regime.
Nevertheless, he said the department agrees with report's basic findings and is committed to improving all aspects of the licensing process.
Following are excerpts from Maggi's testimony plus highlights of the GAO report:
(begin excerpt)
STATEMENT BY ROBERT W. MAGGI MANAGING DIRECTOR,
DIRECTORATE OF DEFENSE TRADE CONTROLS,
U.S. DEPARTMENT OF STATE
Before the Subcommittee on National Security, Emerging Threats, and International Relations of the House of Representatives Committee on Government Reform, March 9, 2004
Mr. Chairman, members of the committee, thank you for the opportunity to appear before you today to discuss the General Accounting Office's assessment of the Department of State's controls on the export of cruise missiles, unmanned aerial vehicles (UAV) and related technologies. As stewards of the nation's defense exports, we have no higher priority than ensuring that the recipients of U.S. defense articles and services comply with U.S. export control laws and regulations. We are also very mindful in the post 9/11 environment of our responsibility for preventing the proliferation of weapons of mass destruction (WMD) and the systems for their delivery as well as the ease with which rogue states and non-state actors can acquire these systems and technologies. With so much at stake, therefore, we welcome the scrutiny of our performance and practical suggestions on how to improve our system of export controls over such defense articles.
We are grateful to the GAO for focusing attention on some of the means we use to verify the end-use of cruise missiles and UAVs, in particular the role of the Blue Lantern program as a post-shipment check, and we accept many of the report's conclusions and observations. We wholeheartedly agree, for example, that cruise missiles and UAVs in the hands of our adversaries pose a threat to U.S. national security. We also agree that effective export controls are an important tool in combating the proliferation of these capabilities.
At the same time, however, I would like to draw attention to several critical aspects of the Department's approach to controlling these weapons and technologies that the report overlooks -- in particular the rigorous review and screening process that each export receives as part of the licensing system and the essential role this process plays in our end-use check program. By looking at the Blue Lantern program in isolation from these other tools -- and our broader response to the threat of cruise missiles and UAVs falling into the hands of rogue states or non-state actors -- the GAO paints an incomplete and fuzzy picture of our end-use check program and the level of controls over these exports. Today, I'd like to fill in some of the details missing from the GAO study to put our end-use check program into the proper context.
The Cruise Missile/UAV Threat and the U.S.
Response
Although ballistic missile proliferation continues to grab most of the headlines, we remain vigilant about the growing threat of cruise missile and UAV proliferation. Today, as you will hear in subsequent presentations, there is increasing interest by both state and non-state actors in acquiring cruise missiles and UAVs for the delivery of both non-conventional and conventional payloads.
The UAV proliferation threat: The same attributes of UAVs that are so useful for the U.S. military -- for example, the ability to strike targets with precision, substantial protection from interception, and capabilities for real time intelligence collection -- make UAVs in the hands of our adversaries a threat to the United States and to our friends and allies. Moreover, UAVs are potential delivery systems for Chemical and Biological Weapons (CBW). In the past, most of our concern about the use by adversaries of WMD-armed UAVs focused on nation-states. Since 9/11 however, we have been much more conscious of the potential for terrorist groups to produce or acquire small UAVs and use them for CBW delivery. It is important to note, however, that because of MTCR [missile control technology regime] controls the biggest threat of proliferation rest come from the United States and its allies, but rather from other countries that produce UAVs indigenously.
The Cruise Missile Proliferation Threat: As noted in previous National Intelligence Estimates, in some scenarios cruise missiles can provide a better alternative than ballistic missiles when launched from forward areas. Adversaries could therefore see these missiles as advantageous in attacking the United States, our forward-deployed forces, or our friends and allies. Indeed, the U.S. Intelligence Community estimates that one to two dozen countries probably will possess a land-attack cruise missile (LACM) capability by 2015 through indigenous development, acquisition, or modification of such other systems as anti-ship cruise missiles or UAVs. The most plausible means for a forward-based launch against the U.S. homeland would be a covertly equipped commercial vessel.
While acknowledging the threat posed by proliferation of these weapons to rogue states or non-state actors, it is equally important that we have the ability to provide appropriate systems to allies and friends, while maintaining adequate protections to prevent further proliferation. In this regard, it is important to note several salient characteristics of the emerging cruise missile/UAV proliferation threat.
-- First, while cruise missiles and UAV capabilities have multiplied around the world, the United States and our allies in Europe and the Pacific are not significant contributors to this problem. U.S.-origin systems have not been exported to the threat countries about which we worry. Nor do we see indications that our friends and allies are engaged in the unauthorized re-export of U.S.-origin cruise missiles and UAVs. We expect these trends to continue because of, among other things, the strength of the U.S. export control system and improved multilateral export controls, both of which make foreign suppliers more attractive to proliferant countries as sources of cruise missiles, UAVs and associated technologies.
-- Second, much of the cruise missile/UAV proliferation that has occurred to date has posed a limited threat to the U.S. homeland. The vast majority of cruise missiles and UAVs in the inventory of problem countries are battlefield models with short range and limited payload capacity -- not longer-range land attack variants. We are concerned about the growing threat to U.S. forces deployed overseas from non-U.S. origin weapons, particularly long-range anti-ship cruise missiles. Overall, however, the United States' overwhelming conventional military superiority will limit the military utility of these weapons to our opponents for some time to come.
-- Third, cruise missiles and UAVs vary widely in their capabilities and operational requirements and thus lumping these systems together under one label creates a distorted picture of the threat. As discussed in more detail below, making distinctions among these systems is important in assessing U.S. export controls because most of the cases the GAO highlighted involved the sale of the U.S. Navy's Harpoon anti-ship missile and related supplies, a short-range system (60-150 miles) with a limited conventional payload and land attack capability.
None of this should be seen as complacency in the face of a growing threat. To the contrary, this administration, as the GAO acknowledges, has taken several steps in response to the worldwide proliferation of cruise missiles and UAVs.
-- U.S. Defense Trade Controls: We need to assure that our controls are clear and well-defined. To this end, we currently are engaged in a review of the United States Munitions List (USML), which lists the goods and services subject to State Department licensing authority. We are seeking to clarify the controls on UAVs by incorporating into the USML the range/payload parameters for UAVs outlined in the Missile Technology Control Regime (MTCR). This change, which we intend to publish shortly, reflects our own increased attention to this potential threat.
-- Other Tools: Our own export controls are only one of many tools the United States employs to impede cruise missile and UAV proliferation and mitigate its impact. For example, through the MTCR, the Wassenaar Arrangement (WA), and our export control assistance programs, we work cooperatively with friends and allies to ensure that sensitive technologies are not transferred to missile programs of concern. Indeed, during the past two years the Wassenaar Arrangement has formulated and implemented new controls on its dual-use list for UAVs and associated technologies, and the MTCR has added controls to UAVs capable of dispensing aerosols (such as chemical and biological weapons). In addition, we have a longstanding effort to identify and interdict individual shipments of equipment and technology to such programs, particularly foreign shipments, which has now been bolstered by President Bush's Proliferation Security Initiative. Finally, U.S. law mandates sanctions against foreign entities involved in various acts of missile proliferation, which act as a deterrent. Put simply, the GAO's focus on the use of export controls to curb proliferation, and U.S. exports controls in particular, represents only one aspect of our efforts to ensure that these systems and technologies do not fall into the wrong hands.
The Blue Lantern Program
The Blue Lantern program is a long established system of pre-license and post-shipment checks conducted by staff from our embassies. The program is used to help licensing officers by providing them additional information to verify the specific end-use and end-user of commercial defense exports and transfers. The goal is to prevent U.S. defense exports from falling prey to diversion, including from the gray arms network, which uses fraudulent export documentation to acquire defense articles through legitimate channels for end-users inimical to U.S. interests.
The Blue Lantern program of pre- and post-license checks is an integral part of the licensing process. While the Blue Lantern program clearly provides a specific check on the bona fides of a particular export transaction, equally important is that these checks over time help provide a record on the reliability of the parties to an export. For example, licensing officers often request a pre-license check on unfamiliar end users. The response from our embassy overseas is often positive with a full explanation of the history of the company and its role in a particular project or the relationship of the company to the Ministry of Defense. Given this information, the licensing officer usually does not need to seek another pre-license check on this party in the next application. In short, the previous check, coupled with the other information available with the new application and all the other checks that are run, is usually sufficient for the licensing officer to make a determination on whether to approve that license.
Blue Lantern checks are targeted based on a well-developed selection process designed to identify for our licensing and compliance officials transactions that are most vulnerable to diversion or misuse so that the most efficient use is made of the finite resources available for pre and post-shipment verification. Over the past three years, the Department has improved and refined this targeting system and the program results demonstrate this. We have conducted over 1200 checks over the past three years and developed derogatory information in almost 200 cases. In FY [fiscal year] 2003 alone, DDTC initiated 413 checks that resulted in 76 unfavorable cases.
The most prevalent commodities involved in unfavorable determinations are firearms and ammunition, which accounted for almost half of unfavorable cases in FY2003. (Just last month a pre-license check blocked hundreds of 9mm pistols from going to Colombian rebels). The percentage of unfavorable checks involving aircraft spare parts at risk of diversion to prohibited countries such as China and Iran jumped from 18 percent in 2002 to 24 percent in 2003. Electronics and communications equipment represented 17 percent of the unfavorable cases last year, while the remaining unfavorable checks involved commodities such as tactical missile spare parts, military training equipment, and night vision equipment.
The Blue Lantern program has strengthened export controls and has proven to be a useful instrument in: 1) deterring diversions; 2) aiding the disruption of illicit supply networks used by rogue governments and international criminal organizations, and 3) helping the Department make informed licensing decisions and ensuring compliance with the AECA [Arms Export Control Act] and the ITAR [International Traffic in Arms Regulation]. End-use checks performed under the Blue Lantern program have significantly encouraged compliance with legal and regulatory requirements and have proven particularly effective in addressing the growing problem of gray arms trade. These checks also support broader U.S. policy goals related to legitimate defense trade. These goals include:
-- Impeding access to military items and technologies by persons and organizations that do not have the best national security interests of the United States or our friends and allies in mind, including those which contribute to the proliferation of weapons of mass destruction;
-- Preserving continued technological advantages enjoyed by U.S. military forces and our friends and allies over potential adversaries; and
-- Encouraging foreign government support for U.S. principles, laws, regulations, and practices concerning the responsible sale, retransfer, and end use of defense equipment and services.
The profile of the Blue Lantern Program has been raised over the past few years by DDTC's outreach efforts to U.S. embassies, U.S. exporters, and foreign governments. In FY 2003, DDTC officers presented Blue Lantern briefings at various U.S. embassies through Asia and Central America to provide additional guidance to posts on the implementation of end-use checks. Briefings were also given to relevant host government officials to make them aware of the goals and purposes of the program as well as to facilitate its implementation abroad. In addition, DDTC officers also attended conferences in the United States and abroad in order to increase understanding of the program by foreign governments and U.S. exporters and to emphasize the utility of end-use monitoring in fighting the gray arms trade. And we continue to encourage NATO and EU [European Union] governments to adopt Blue Lantern-type programs to ensure that their exports are not inadvertently entering the gray arms market. DDTC plans to continue outreach efforts in the future.
Conclusion
In closing, I'd like to underscore the importance of viewing our end-use check program within the broader framework of our multifaceted approach to regulating defense trade and the numerous end-use controls that are embedded within the licensing process and many of our other compliance and enforcement activities. Seen within this context, it is not surprising that GAO found no evidence of misuse or diversion of UAV or missile-related technologies authorized for export by the Department of State -- a conclusion that speaks volumes about the effectiveness of our export licensing system and end-use check program.
Nevertheless, we are not standing still in the face of the growing threat posed by the increasing efforts of unfriendly nations to acquire cruise missiles, UAVs, and related technology. We are committed to improving all aspects of the licensing process including the Blue Lantern program and our overall compliance effort. The weaknesses of the GAO report notwithstanding, we agree with its basic findings and accept many of its recommendations. In particular, we agree on the need for more Blue Lantern checks and indeed our program plan for this year includes a 25 percent increase in the number of checks to be conducted. This increase will be done concurrent with our ongoing effort to continually improve the targeting and effectiveness of the end-use checks we conduct. Part of our work plan for increasing the number of checks is to target select industries, technologies or countries for intensive review. As I have said, because the Department shares GAO's observation of the importance of controlling cruise missiles, UAVs, and related technologies, we will include these items as part of this year's effort. In sum, on this issue GAO and the Department of State are both singing from the same sheet of music.
(end Maggi text excerpt)
(begin GAO text)
General Accounting Office
Highlights of GAO-04-493 testimony before the Subcommittee on National, Security, Emerging Threats, and International Relations, Committee on Government Reform, House of Representatives
Why GAO Did This Study?
Cruise missiles and unmanned aerial vehicles (UAV) pose a growing threat to U.S. national security interests as accurate, inexpensive delivery systems for conventional, chemical, and biological weapons. GAO assessed (1) the tools the U.S. and foreign governments use to address proliferation risks posed by the sale of these items and (2) efforts to verify the end use of exported cruise missiles, UAVs, and related technology.
What GAO Found
The growing threat to U.S. national security of cruise missile and UAV proliferation is challenging the tools the United States has traditionally used. Multilateral export control regimes have expanded their lists of controlled technologies that include cruise missile and UAV items, but key countries of concern are not members. U.S. export control authorities find it increasingly difficult to limit or track unlisted dual-use items that can be acquired without an export license. Moreover, a gap in U.S. export control authority enables American companies to export certain dual-use items to recipients that are not associated with missile projects or countries listed in the regulations, even if the exporter knows the items might be used to develop cruise missiles or UAVs. American companies have in fact legally exported dual-use items with no U.S. government review to a New Zealand resident who bought the items to build a cruise missile.
The U.S. government seldom uses its end-use monitoring programs to verify compliance with conditions placed on the use of cruise missile, UAV, or related technology exports. For example, State officials do not monitor exports to verify compliance with license conditions on missiles or other items, despite legal and regulatory requirements to do so. Defense has not used its end-use monitoring program initiated in 2002 to check the compliance of users of more than 500 cruise missiles exported between fiscal years 1998 and 2002. Commerce conducted visits to assess the end use of items for about 1 percent of the 2,490 missile-related licenses we reviewed. Thus, the U.S. government cannot be confident that recipients are effectively safeguarding equipment in ways that protect U.S. national security and nonproliferation interests.
What GAO Recommends
The Secretary of Commerce should assess and report to Congress on the adequacy of an export regulation provision to address missile proliferation by nonstate actors and on ways the provision might be modified to address a gap in U.S. export control authority. The Secretaries of State, Commerce, and Defense each should complete a comprehensive assessment of cruise missile, UAV, and related dual-use transfers to determine if U.S. exporters and foreign end users comply with conditions related to the transfers. Commerce and Defense partially agreed with the recommendations. State disagreed to complete an assessment, but said it would pay special attention to the need for more checks on cruise missile and UAV transfers.
The full report can be viewed at www.gao.gov/cgi-bin/getrpt?GAO-04-493T.
(end text)
(end excerpt)
(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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