Balancing the National Interest U.S. National Security Export Controls and Global Economic Competition (1987) / Chapter Skim
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Appendix B: Panel Foreign Fact-Finding Mission Reports
Appendix B: Panel Foreign Fact-Finding Mission Reports
Pages 183-220
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From page 183... ...
the U.S. national security export control regime, (2)
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From page 184... ...
EUROPEAN MISSION* Generic Policy Issues UNDERLYING ASSUMPTIONS During the course of their visits to the United Kingdom, Belgium, France, Austria, the Federal Republic of Germany, and Sweden, the various delegations identified a number of common assumptions that form the basis of European views on national security export controls.
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From page 185... ...
U.S. efforts to impose restrictions on West-West trade with the CoCom countries send precisely the wrong signal; that is, they have the effect of destroying the element of trust in the relationship.
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From page 186... ...
But they also emphasized that, in most cases, reexport controls are not the answer, particularly for widely available technologies that are considered to be virtual commodities by many countries. CONTROLS AND COMMERCIAL ADVANTAGE Many Europeans, in a number of the countries visited by the delegations, expressed the view that somehow the United States had designed its controls to confer commercial advantage on American companies.
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From page 187... ...
EXTRATERRITORIALITY Yet another area in which Europeans see a clash of foreign policy and national security motivations is the U.S. effort to extend the reach of its law to other countries through the imposition of reexport controls.
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From page 188... ...
· Two-tier system Recognize explicitly that there is a natural division within CoCom in terms of the commitment of different countries to treat and enforce export control policies and "reward" compliant countries with the removal of reexport requirements. · Treaty Formalize the CoCom arrangement as an international treaty to require all participating nations to deal with national security export controls on a multilateral basis.
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From page 189... ...
2. Reexport controls This was probably the issue of second greatest concern due to the onerous and confusing nature of the requirements and the issues of national sovereignty raised by the extension of U.S.
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From page 190... ...
It also was apparent, however, that there were limits to what the non-CoCom countries were prepared or able, under existing laws, to do to stop reexport operations especially since none of the other CoCom countries currently impose reexport licensing requirements. GOODS IN TRANSIT A problem similar to that of diversions exists with respect to goods transiting a country under bond.
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From page 191... ...
U.S. unilateral national security export controls (both in terms of original exports and reexports)
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From page 192... ...
· Abandon reexport controls on exports to other CoCom countries. (It was noted that the new G-COM license works only for lower-level goods and that a broad distribution license is not available for all users.)
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From page 193... ...
control regimeand, indeed, U.S. behavior within CoCom is designed to work to the advantage of U.S.
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reexport controls, particularly the audit requirements under the distribution license. Nevertheless, they seem resigned to accommodating U.S.
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From page 195... ...
The commission is, of course, mindful of the fact that the EEC is to become integrated by 1991. This suggests the need for a common approach to export controls within Europe, an approach in which controlled items might be traded freely within the EEC countries (and, by inference, within CoCom)
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From page 196... ...
The French have a relatively tight system of export controls on indigenous technology, although reexport approval by the government is not required. The system relies on end use certification.
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From page 197... ...
national security export control regime and the need for multilateral export controls. If anything, the West Germans are even more tolerant of U.S.
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Although Austria does not share the U.S. view of the need for export controls, it respects the right of the United States to determine what is in its national security interests.
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SWEDEN Like Austria, Sweden carefully guards its neutral status. Yet, Swedish attitudes toward export controls have been changing rapidly over the past few years, driven in large measure by the publicity surrounding some of the major diversion cases (e.g., the VAX 11/780 computers)
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From page 200... ...
· U.S. reexport controls are very long and difficult to follow....The time required for U.S.
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It is unacceptable that ~ J must seek approval to reexport from France to West Germany or Italy.
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Commerce Department, including occasional lost submissions. · Smaller Swedish firms have a difficult time with export and reexport controls.
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From page 203... ...
The delegation to Japan was chaired by Lew Allen and included panel members John McLucas and Richard Meserve; staff members were Mitchel Wallerstein and Stephen Merrill. The Korean delegation was led by John McLucas; accompanying him were panel member Leif Olsen and Mitchel Wallerstein and Stephen Merrill.
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From page 204... ...
In Malaysia, a policy of inducements for foreigners to set up manufacturing operations in nine designated free trade zones has resulted in a
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From page 205... ...
technology, Japanese reluctance to transfer technology, the closed Japanese management system, and the Seclusiveness of Japanese resident managers. Nevertheless, such prejudices appear not to have gotten in the way of government and private decisions, and many representatives of American firms fear that they are losing ground to the Japanese on both exports and direct investment opportunities, largely because "Japanese companies plan for the long term." PERCEPTIONS OF THE SOVIET UNION Generally speaking, the five countries visited by the delegations view the Soviet Union as a political adversary and a potential military threat;
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From page 206... ...
China's current shortage of foreign exchange has reduced expectations everywhere, but especially in Japan. Export Control Issues FOREIGN AVAILABILITY/DOMESTIC CAPABILITY The delegations were struck continually throughout their study mission by the widespread availability of "low-end" technology ostensibly controlled by CoCom.
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From page 207... ...
It was not difficult, on this basis, to arrive at a view that, whereas the current control problem involves (with the obvious exception of Japan) foreign availability of CoCom-origin technology, the day is not far off when many of the East Asian NICs will be able to develop and produce technology rivaling that on CoCom's International List.
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From page 208... ...
Nevertheless, based on their overall assessment of the situation, the delegations found it reasonable to conclude that diverters can and do ship through the freewheeling, high-volume ports of Singapore and, to a lesser extent, Hong Kong, with virtual impunity. This would be particularly true with respect to goods originating in CoCom countries other than the United States, which do not impose reexport control requirements.
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· In the eyes of Hong Kong officials, the relaxing of controls on China while retaining its proscribed status will not be tenable for long. They urge the removal of China from the CoCom control regime.
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The current lack of a "de minimis" provision in the current reexport control regulations a provision that allows shipment without a reexport license when the percentage of U.S. componentry in a product falls below a stated threshold is viewed as a serious disadvantage.
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From page 211... ...
subsidiaries and partners, as well as endless arguments about reexport controls on technology of mixed national origin, if the United States revises its policy. They indicated that technology flow in both directions would be curtailed.
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reexport controls on military items, although it has been diversifying its sources of military technology. All of these countries, on the other hand, are reluctant to impede commercial exports they consider vital to their economic growth.
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The delegations explored this set of issues with officials in other countries the panel visited. In most cases, the delegation met with incomprehension when it asserted that national security export controls are separated from other trade policy issues in U.S.
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A number of company representatives speculated about the likely impact of export controls on some of the business practices now being introduced in the Far East. Specific mention was made of two factors: (1)
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are reviewed by the newly established Office of Security Export Control (11 staff members)
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The Koreans find no need for export controls because they produce nothing of a dual use nature that is militarily sensitive. Furthermore, they are constantly aware of the omnipresent threat from the North and that it would be inimical to their own interests to have militarily sensitive technologies find their way there.
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From page 217... ...
Mention was also made of the fact that, beginning in February 1986, the PRC Ministry of Foreign Economic Relations and Trade will issue end-use certificates for 27 product categories. This procedure is supposed to facilitate a higher volume of trade with the CoCom countries, but businessmen fear that it now will result in additional bureaucratic delays in China being factored on top of licensing delays at CoCom.
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From page 218... ...
Although Malaysia controls imports and exports to Israel and South Africa, it maintains no formal export controls for reasons of national security. It does not, for example, control semiconductor exports (although it is the world's largest assembler of semiconductors)
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From page 219... ...
subsidiaries and partners, and endless arguments about reexport controls on technology of mixed origin, if the U.S. revises its policy on technical data.
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From page 220... ...
· ~ ~ estimates that they lost $8.6 million of business due to export controls to India and China. One license was applied for in early 1984 and not granted until October 1985.
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