US Export Control Policy and Wassenaar Arrangement

P.R. Rajeswari,Res. Assistant,IDSA


Since the end of World War II, the industrialised and developed countries of the world have tried to control the flow of technology and some "dual use products" to the developing world through various control regimes. This aspect has acquired a great deal of significance in the East-West or the North-South dialogue. One of the earliest regimes had been that of the Coordinating Committee on Multilateral Export Controls (COCOM) and the latest one is that of the Wassenaar Arrangement. Some of the other control groups are the Nuclear Suppliers Group (NSG), the Missile Technology Control Regime (MTCR), the Australia Group (AG), Central Asian/Caucasus Export Control Forum, Nonproliferation and Export Control Cooperation (NEC).

During the Cold War years, COCOM was the most important mechanism to control technology transfer from the developed to the developing countries. COCOM was a US led 17-member group, located at Paris and this group was initially designed to deny East-West transfer of technologies, primarily to retard the qualitative progress of Soviet military capabilities. With the end of Cold War, the Bureau of Export Administration (BXA) of the US Department of Commerce participated in several rounds of negotiations to establish a successor regime to COCOM. As a result of the continuous effort to establish a new regime, Wassenaar Arrangement came into existence.

The Nuclear Suppliers Group (NSG), currently composed of 32 countries, maintains a control list of nuclear-related dual use items and guidelines for their control. NSG member countries, last year completed a technical review of the dual use control list and are presently engaged in restructuring the present control language to better reflect nuclear proliferation concerns as well as to allow a more effective implementation of export controls for these items. The Department of Commerce continues to issue license denials for NSG controlled items as part of the "no undercut provision."

The Missile Technology Control Regime (MTCR) founded in 1987 and currently comprising 28 member countries is an informal group whose members coordinate their national export controls to help prevent missile proliferation. Each member country, under its own national laws, has agreed to abide by multilateral MTCR guidelines, for controlling the transfer of items that contribute to missile programmes. These items are identified in an MTCR Equipment and Technology Annexe to the Guidelines.

The Australia Group (AG) is an informal multilateral body formed in 1984 to address concerns about proliferation of chemical and biological warfare capabilities. In a meeting held two years ago, the 'Biological Weapons Experts' conducted a technical review of AG biological control list, which has been in force for the past five years. They agreed on tightening controls on certain micro organisms and equipments (e.g., fermenters) that can be used in the production of biological weapons.

As part of the US administration's continuing effort to encourage other countries to strengthen their export control systems, the Department of Commerce and other agencies conducted a wide range of discussions with a number of foreign countries. In late 1994, BXA created NEC team to marshall BXA's resources and expertise to support US export control cooperation programme in the former Soviet Union, the other newly emerging states in the Central Asian, Transcacausian, and Baltic regions and certain Central European states. The NEC team, with representations from the Department of State, Defence and Energy, and the US Customs Service, coordinated 14 cooperative exchanges with Belarus, Kazakhstan, Ukraine, Lithuania, Bulgaria, Romania and Poland. These cooperative exchanges focused on the legal base for export control systems, regulatory procedures, licensing processes, preventive enforcement mechanisms, industry-government relations and systems automation.

In November 1995, BXA participated in an inter-agency delegation as co-hosts with Turkey in an export control forum for seven Central Asian and Cacausus states (Armenia, Azerbaijan, Kazakhstan, Kyrgystan, Tajikistan, Turkmenistan and Uzbekistan). It concentrated a great deal on legal, legislative, and non proliferation issues, including licensing and enforcement.

Wassenaar Arrangement is the latest of the export control regimes established in the mid-1990s. On December 19, 1995, 28 countries (former COCOM partners, cooperating countries, Russia and Visegrad states) agreed to establish a new regime, called the Wassenaar Arrangement. This regime established at the Hague was to coordinate policies on exports of conventional arms and armaments, related dual use equipment and sensitive technology.

Wassenaar succeeds the Cold War-era COCOM, but differs from it in many critical ways. Firstly because COCOM controlled only technology, not conventional arms. Secondly, some of the COCOM targets like Russia are today Wassenaar members. Unlike COCOM, no Wassenaar member can veto an export by another member. Each member enforces its own export control system without prior notification to others of approvals and denials. Though the US proposed prior notification of controlled exports and narrowing the regime's focus, the other members rejected the proposal.

Also unlike COCOM, which focused on denying sensitive technology specifically to the Soviet Union and Soviet bloc countries, Wassenaar aims to have a more flexible approach, focusing on countries behaving badly at any given moment. Clifton Johnson, a Special Assistant in state on export control issues, said that the Wassenaar Arrangement would work as follows:

-- Members will notify each other through the regime's Vienna Secretariat about their export approvals and denials twice a year;

-- They will share information on exports and intelligence at high-level and technical meetings, thus revealing pattern of sales to countries and regions of concern;

-- They will decide on the basis of this shared information, which countries and regional hot spots should be the Wassenaar focus for the next six months or one year.1 He further said that through this process, the benefits of prior notification would be realised, which in turn, would prevent members from undercutting each other's export controls.

At the start, the members of Wassenaar Arrangement would report exports of controlled arms and technology to all destinations, even those which do not create concern. The regime now has a global approach, but the United States feels that to make it a more efficient mechanism, it should have a focus on regions of concern or countries of concern. While Wassenaar will not target specific countries, the United States views Iran, Iraq, Libya and North Korea as countries whose behaviour is a cause of concern which should be proscribed from acquiring arms or sensitive technology. The Europeans allow export of civil aircraft to Iran, which the United States does not approve, but the two countries agree on denying arms and technology to Iran.

Finally, the diverse membership of Wassenaar Arrangement seeks an opportunity to prevent a dangerous build-up of weapons in selected states as happened in Iraq before the Gulf War. The Wassenaar Arrangement comprises of Australia, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, Russia, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

Although the industrialised nations of the "North" come about with these export control mechanisms, the United States has enjoyed a great deal of supremacy in regard to its technological thrust. There have been areas of strong competition among the highly industrialised and developed nations of the "North," but a significant edge in terms of its transfer to the developing world has been sharpened by the US as a donor country.

National security export controls of the US are an essential aspect of its foreign policy. These export controls are procedures that are designed to regulate the transfer of such items that might adversely affect US military potential or reduce its superiority. There have been a few other broader threats to national security, such as the proliferation of nuclear, chemical, biological and advanced conventional weapons and missile delivery systems. Control of exports relating to some of these threats has traditionally been dealt by the foreign policy export controls. These are restrictions, imposed on the export of general classes of items to one or more specified countries in order to further the foreign commitments and interests of the United States or to fulfil its international obligations.2

An analysis of the past export control policy suggests the following objectives that have been pursued by the US.

1. Preventing any access to the Soviet Union of technology-oriented items and such other products that may contribute to their significant improvement in advanced weapons systems;

2. Also, its prevention in the like manner, to other countries which may aspire for developing advanced weapons systems;

3. Not to lend any access of US technology, that might contribute towards proliferation of nuclear, biological, chemical weapons and missile delivery system, by other countries that have harboured such aspirations or are in any manner heading towards such a technological know-how.

4. Imposing sanctions against defiant countries with the help of multilateral agreements internationally instituted against such violations.3

Since 1945, the United States and its allies have tried to control the transfer of advanced technology from one country to another through various multilateral regimes. These mechanisms had been instituted in an effort to deny certain Western technology to the erstwhile Soviet Union and its allies. This effort had limited the access of technology which could have upgraded the military capabilities of the Soviet bloc countries. This denial, however, did not prevent the Soviets from fielding capable and effective weapons systems. It only caused them to rely on less sophisticated technology, and it forced them to invest enormous resources in military-related research and development which might have otherwise been used for civilian purposes.

Yet, the Soviets and other Warsaw Pact countries did not lack in any of the sensitive technology and intelligence information network. It indicated that the Soviet technology and its acquisition effort were massive, well-financed, and frequently effective. There had also been great concern among the developed countries over the acquisition of controlled technology by nations that do not cooperate in national security export controls. The countries of concern included both industrialised neutral countries of Europe and some others who were more advanced and newly industrialising countries such as India, Singapore and Brazil. There are many instances where one can come to a conclusion that, for most types of dual use technology and product, the Soviet Union and other developing countries lagged far behind and it did not appear to close the gap. As long as the West continued its own rapid pace of innovation, developing countries could not reduce the gap.

If one analyses the origin of the export control policy, it is unchanged in its basic legal structure from what was originally granted by Congress in 1940 as an extraordinary War Power. Two laws provide the primary statutory mandate. The Arms Export Control Act of 1976 required government approval for the import and export of military weaponry and services. The Export Administration Act (EAA) of 1979, as amended, controls dual use goods and technologies that could make a significant contribution to the military capabilities of a potential adversary. EAA, which is implemented by the Department of Commerce through the Export Administration Regulations (EAR), also authorises controls that may be necessary to serve US foreign policy goals and to ensure the domestic availability of resources in short supply.

The regulations implementing the national security control regime are vast and complex. There are many federal agencies that share responsibilities in the implementation process. In general, the Commerce Department regulates exports of commercial equipment and technology, while the State Department controls exports of military equipment and technology. Department of Defence (DOD) advises both agencies on the strategic significance of commercial and military exports. The Department of Commerce and the US Customs Service share responsibility for the enforcement of national security export controls.

The list maintained by the Department of Defence (DOD), the Military Critical Technologies List (MCTL), serves a limited purpose within the department as a reference document for developing control proposals and informing licensing decisions. It is also useful for identifying those goods and technologies that have dual use potential.

During the Cold War years, almost all these national security export controls were primarily intended at the Soviet Union and Warsaw Pact allies, but the control regime also regulated exports to many other nations because of concern about possible diversions or uses that might be detrimental to US security or to the security of US allies and other friendly nations.

A major EAR component is a list (i.e., the US control list) specifying the characteristics of each commodity subject to control. It is divided into 10 categories:

1. Metal working machinery

2. Chemical and petroleum equipment

3. Electrical and power generating equipment

4. General industrial equipment

5. Transportation equipment

6. Electronics and precision equipment

7. Metals, minerals, and their manufactures

8. Chemicals, metalloids, and their manufactures

9. Rubber and rubber products

10. Miscellaneous.4

As one studies the issue of technology transfer, a few points are to be kept in mind. Firstly that the character of the international market place is evolving in such a way that diffusion of technology is rapid and global in scope. There are many factors that contribute to the process of diffusion, like the tendency among multinational corporations to locate research, development and production facilities around the world and the existence of indigenous capability in many of the developing countries.

Secondly, there is a growing global market for dual use products, most of which embody advanced technology. The high-technology sector demands heavy investments in research and development. The rapid technisisation has tended to push commercial development ahead of military development. Acceleration of commercial development, coupled with a lengthening of the US military procurement cycle, has resulted in the increased availability of dual use products embodying technology more sophisticated than deployed for use by the military.

Thirdly, since trade is a steadily growing part of US economic activity, policies that affect it are increasingly important to the overall US economy. The United States is the single largest trader, reporting exports of $360 billion in 1985. Trade policies that might diminish West-West trade thus have great potential to damage the US economy than do those that might reduce exports to the Eastern bloc. Although export controls are not a leading cause of the recent decline in US high-technology performance, they may contribute towards loss of sales and lead to an environment that discourages export activities by US firms.

Also, US dominance over advanced technology is declining. The United States faces stiff competition in almost every high-technology sector from companies in both developed and developing countries with non-US source technology. The growing technical sophistication of such countries has been the result of their development in indigenous technical capability. These countries, at present, do not have high-technology capability to be in competition with the advanced countries. But they are certainly beginning to make great strides in regard to this goal. They already are effective competitors at somewhat lower but still technologically sophisticated levels. Thus, the United States cannot succeed in its efforts to block acquisition of militarily sensitive western technology unless it has the full cooperation of the other technologically advanced countries that may represent alternate sources of supply.

Lastly, maintaining the vitality of all the western economies has assumed greater importance for the national security of the United States.5 Also, with nearly all advanced technologies having civil and military applications, these days the concept of "dual-use" technologies has lost much of its relevance, although US policy makers continue to raise it to gain legitimacy for their export controls.6

Export Administration Act (EAA) of 1979 expired in 1994 and US export controls have been kept under emergency law. There have been attempts by Congress over six years to rewrite EAA, and finally the House National Security Committee drafted a bill to relax some controls and tighten others. In line with the aims of the multilateral non-proliferation regimes, the bill would prohibit export of goods used in producing weapons of mass destruction to any country not a member of, or not cooperating with the regimes, viz.; MTCR, the AG for chemical and biological weapons, the NSG and the Wassenaar Arrangement for advanced technology. The bill would unilaterally prohibit the export of any controlled goods to identified terrorist countries.

Also, there have been controls on the export of super computers of high-performance. The policy, though relaxed in 1997, has been tightened of late, by the Clinton administration to restrain its export to a number of countries. In the US view, India is a nuclear and missile proliferator and this perception underscores the different export controls that are imposed on high-tech trade and technology transfer to India. Therefore, for any kind of rapprochement to take place, the US has to first alter its laws. Not only are there no signs of that happening, but more significantly, export controls on high-performance computing (HPC) systems to countries like India have been tightened, rather than relaxed. While super computers are useful for diverse high-speed number crunching applications, they can also be used for designing advanced nuclear weapons and simulating nuclear explosions. The US perceives the access of HPC systems to "countries of proliferation concern" as a national security problem.

In October 1995 President Clinton had ordered a major loosening of the existing controls in export of HPC systems, including super computers, urged by computer manufacturers, who were eyeing the emerging markets especially in India, China and Russia. This led to a categorisation of states into four major divisions with progressively increasing levels of controls. Tier-1 countries included US allies with almost no controls; Tier-2 countries could receive HPC systems of Composite Theoretical Performance (CTP) levels up to 10,000 million theoretical operations per second (MTOPS), and includes "non-rogue" NPT signatories like Antigua, Barbuda, Bangladesh, Belize, Haiti, Equatorial New Guinea, Nicaragua, Poland, Slovak Republic, Somalia and Togo. Tier-3 controls allowed exports and re-exports of super computers without individual validated licenses (IVLS) of the Bureau of Export Administration (BXA) with ratings up to 7,000 MTOPS to civilian end-users and up to 2,000 MTOPS to military users.7 Tier-4 implied total prohibition of computer exports for "rogue" states like Iran, Libya, Iraq, and North Korea. Earlier, all shipments, not only military, of computers above 2,000 MTOPS required an IVL. Now, the National Defence Authorisation Act (NDAA) provides the controls, which requires that the exporter first notify the BXA of all shipments of computers above 2,000 MTOPS rating.8 And in turn, the BXA would inform all the different agencies of the US government about the shipping. Within ten days of exporter's notice, any one of the agencies can raise an objection and insist on the exporter to go through the process of individual validated licenses.

In June 1997, the policy was relaxed arguing that such action would only take business away from US companies without promoting US national security because high-performance computers have become so widely available from non-US sources. But again, the Clinton administration has tightened its export control policy on super computers. The recent move to slam fresh controls was the effect of the revelation early this year about some HPC systems of US origin found in nuclear research centres in Russia and China. Deputy State Department spokesman James Foley said in Washington on March 11, 1998: "It was generally accurate that Russia twice turned down formal US government requests to find out how US made super computers were illegally diverted to Russian nuclear plants.'9 The United States has been trying to learn how high-speed Silicon Graphics and IBM computers were sold without licenses.

In January 1997, the head of Russia's Atomic Energy Agency, Minatom, publicly announced the acquisition of five US-made super computers for use in simulating nuclear explosions (to ensure safety and reliability of Russia's nuclear arsenal in the wake of the ban on nuclear testing). There were four Silicon Graphics Power Challenge-L machines, together capable of more than 4,400 MTOPS, and one IBM RS-6000 SP super computer capable of 10,000 MTOPS. The acquisition of such systems capable of designing nuclear weapons by potential adversaries were being viewed by US legislators as a serious security problem caused by the lacuna in the loosened controls in 1995, which allowed, or did not ensure proper check on reexports and who the end-users were. Therefore, there have been a series of changes coming about in the export of super computers and India finds itself unwittingly caught in this net. Now, with the tightening of the controls, US computer exports have to comply with the new norms of clearance for HPC systems above 2000 MTOPS. The new legislation is a balancing act between US national security concerns and US commercial interests.

At this stage, one should analyse its relevance to India. This legislation requires the Clinton administration to give 180 days notice before relaxing computer controls further, and 120 days notice before exempting any one of the 50 countries of the Tier-3 control category. Any move to remove India from Tier-3 list would provide an opportunity towards a possible detente. But whether any such move would be made or even considered acceptable is a big question, considering the traditional US attitudes, particularly with regard to India's stance on nuclear and missile issues. Indeed, in a testimony before the House National Security Committee on November 13, 1997, Under Secretary for Export Administration, William Reinsch said:

While it ostensibly gives the President flexibility to change the list of countries in Tier-3...Russia, China, India, Israel and Pakistan could not be removed...this provision will seriously damage our relations with them.10

Therefore, once again, we are back to the same question of how to acquire the HPCs for non-military users. Quite interestingly, the imposition of new controls have come at a time when the National Centre for Medium Range Weather Forecasting of the Department of Science and Technology in India is seeking to acquire a new super computer to replace its old Cray-XMP which was acquired in 1986 as part of the Indo-US Memorandum of Understanding (MoU) on technology transfer. Twelve years ago, this powerful machine was a top-end super computer, with extensive on-site inspection and control. But today after rapid changes have taken place in technology, it doesn't seem to have led to any pragmatic relaxation of these controls, which have great national security implication. The revised legislation would have brought along a whole lot of restrictions on user access.11

According to Silicon Graphics, which today has a 43 per cent share of the world HPC market, the Indian market has a capability to absorb only about one or two machines in the 2000-7000 MTOPS bracket annually. The Chinese have a slightly better capacity of four to five machines. From that angle, the export controls might become minor irritants for even these small numbers required in the country; but it is possible to buy workstations based on HPC processors off-the-shelf and link them up in clusters to achieve good performance scale-ups using appropriate software codes and high-speed communication switches. This is what most of the computer projects in India are doing.

The move to tighten controls also defies logic for an administrative reason as well. In the last two years, a total of 1,100 sales of computer systems have been made by US firms in the 2000-7000 MTOPS range and of these, only 6.3 per cent have been made available to Tier-3 countries. Forty-six have gone to China and eight to Russia, and only these sales seem to be in apparent violation of controls. Thus, the paranoia of proliferation is so mindless that the US government has got itself involved into an unnecessary administrative bind on export of HPCs.

A related problem that has arisen for the US and foreign governments alike, which have been grappling with the problem of balancing commercial and security interests is regulating trade in encryption technology. The present US law prohibits export of encryption technology above a certain level; the technology includes electronic keys to unlock coded communications. William Reinsch, Under Secretary of Commerce said that a Commerce Department study rebutted the industry's complaints that US export controls have encouraged foreign production of very sophisticated encryption products. The administration has been meeting regularly with US industry officials trying to work out a compromise. On a related issue Reinsch said that a multilateral consensus on all kinds of export controls is getting tougher to achieve since the end of the Cold War.

One illustrative example of that was the collapse of talks in April on starting the Wassenaar Arrangement for controlling exports of advanced technology and conventional arms to pariah states. Russia has been blamed for this collapse. It rejected a rule against the undercutting for which all 30 other participants had agreed. The rule reads that when one participant notifies to others the rejection of a certain export, then any other participant should also notify whether it approves of the same export. Russia wants to notify only after the delivery of the export.

Analysing the export control policy of the United States, one finds that it is the Department of Commerce and the Department of State, which regulate the exports of commercial equipment and technology and exports of military equipment and technology respectively. And the Department of Defence has a key advisory role for both of these exports. Besides these departments, there are a number of other government bodies that have a great interest in the transfer of military technology. These incldue the Departments of Treasury, Energy and Justice, as well as NASA, the Nuclear Regulatory Commission, and the intelligence agencies.

The responsibility for the enforcement of these controls lies with the Department of Commerce and the US Customs Service. Although the Department of Commerce has exercised an upper hand in deciding export control issues for dual use commodities and technologies, recently the Department of Defence has dominated the national security aspect of the procedure.

This distinction was made when the Reagan administration came into office. It was quite convinced of Soviet acquisition of US military and dual use products and technology, and this was construed as a serious problem. From then on, the Department of Defence has taken a lead and acted with vigour and the Department of State and Commerce have encouraged the various regime partners to improve their enforcement procedures. For many years in the past, the DOD has had a statutory obligation for proscribed nations; this obligation is now being fulfilled by the Defence Technology Security Administration (DTSA), created under DOD directive. Now, DTSA has assumed full responsibility for license services.

Thus, national security export control system, the multilateral agreements administered by COCOM and/or Wassenaar, and the control system of other nations have been construed to be the essential components of the effort to restrain the flow of military and dual use products and technologies to potential adversaries.



1. USIA Wireless File, March 7, 1996.

2. National Academy of Sciences, National Academy of Engineering, Institute of Medicine, Finding Common Ground: US Export Controls in a Changed Global Environment (Washington DC: National Academy press, 1991) p. 12.

3. Ibid., p. 3.

4. Ibid., The commodity specifications given range from the very specific to the very general. The very general categories serve to catch new products with important characteristics not yet reflected on the US Control List.

5. Ibid., pp. 6-7.

6. Brahma Chellaney, "India as a Target of US Export Controls," Pioneer, February 11, 1998.

7. Tier 3 countries numbered 50. They are: Afghanistan, Albania, Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia-Herzegovina, Bulgaria, Cambodia, China, Comoros, Croatia, Djibouti, Egypt, Estonia, Georgia, India, Israel, Jordan, Kazakhstan, Kuwait, Kyrgizstan, Laos, Latvia, Lebanon, Lithuania, the former Yugoslav Republic of Macedonia, Mauritania, Moldova, Mongolia, Morocco, Oman, Pakistan, Qatar, Romania, Russia, Saudi Arabia, Serbia & Montenegro, Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, Uzbekistan, Vanuatu, Vietnam and Yemen.

8. Business India, January 26-February 8, 1998, pp. 157-9.

9. Observer of Business & Politics, March 12, 1998.

10. Ibid.

11. The ideas have been taken from article in Business India cited above.