Senate Banking, Housing and Urban Affairs Committee

Subcommittee on International Trade and Finance

Hearing on the Reauthorization of the Export Administration Act and
Managing Security Risks for High Tech Exports

Prepared Testimony of the Honorable John Barker
Deputy Assistant Secretary for Export Controls
Bureau of Politico-Military Affairs
U.S. State Department

9:30 a.m., Tuesday, March 16, 1999

Multilateral Regimes

The State Department appreciates the opportunity to address the formulation of U.S. policy and objectives for the multilateral nonproliferation, regional security and export control regimes. The process relies upon the strengths of each of the agencies involved in the U.S. nonproliferation and export control policy process. These include the Departments of State, Defense and Commerce, and the Arms Control and Disarmament Agency for most cases. We seek the views of the Joint Staff where appropriate, and the Department of Energy, the Nuclear Regulatory Commission and the national laboratories are key players on nuclear issues. The Intelligence Community is indispensable for informing policy agencies regarding developments that form the basis for much of our decision-making.

U.S. industry also plays an important, but less direct, role in the formulation of U.S. policy in the multilateral regimes. Developments in multilateral export controls are very important to U.S. companies, and industry generally supports our multilateral efforts, recognizing that this is the best way to ensure a "level playing field" with other major exporting countries. Under the leadership of the Department of Commerce, there are a number of Technical Advisory Committees (TACs) that conduct studies and provide industry perspectives on export control issues.

The Commerce Department ensures that recommendations from the TACs on changes to multilateral controls are vetted appropriately through the interagency review process. Similarly, the Defense Trade Advisory Group (DTAG) provides advice to the Department of State on matters involving munitions controls.

Broadly speaking, U.S. objectives regarding the multilateral regimes are the same as our export control policy as a whole: balancing the strong U.S. national interest in promoting economic growth and prosperity through vigorous export performance, on the one hand, with the essential U.S. national security requirement to prevent the proliferation of dangerous military technologies, particularly those related to weapons of mass destruction, missiles, and advanced conventional weapons. All participating agencies share these objectives.

Specific U.S. objectives regarding the Nuclear Suppliers Group, the Australia Group, the Missile Technology Control Regime, and the Wassenaar Arrangement are developed through interagency working groups involving all relevant agencies, plus the Intelligence Community. The Department of State chairs these groups and is responsible for attempting to reconcile interagency positions and resolve conflicting points of view. If necessary, disputes are escalated to the National Security Council (NSC).

Substantive technical, administrative, and logistical burdens affect the development of U.S. positions to be taken in the multilateral regimes. We hold numerous interagency meetings where technical experts and delegation policy leaders assess what technical changes and updates that should be reflected in the lists and to grind through most of the scenarios that are likely to arise during negotiations.

We work hard to ensure that our positions always have a solid technical basis. The technical expertise primarily resides with other agencies, such as Commerce, Defense and Energy, rather than the State Department. Where State lacks an independent basis for judgments on, for example, the importance of controlling a specific type of machine tool or computer software, we draw on other agencies’ resources and attempt to play the role of an honest broker among competing interests.

For the most part, the interagency process has worked well. The majority of issues are ironed out at the working level. We escalate the cases where necessary both to principals in the relevant departments, and to the NSC for decision.

State generally leads the U.S. delegation to meetings of multilateral regimes. The delegation generally includes all interested agencies and, on occasion, when appropriate and within the parameters of the multilateral group, representatives of U.S. industry.

All the multilateral regimes work by consensus. Any changes require the acquiescence of all participating states. This is an immensely cumbersome process. While all participants in the multilateral regimes have agreed to the basic underlying principles that they embody, there are often serious differences on specific issues. Progress often involves significant diplomatic efforts by our delegations at the meetings but also by our embassies and Washington officials from all relevant agencies.

The Wassenaar Arrangement’s recent success in achieving consensus on new multilateral export controls on encryption products and software is a good example of these efforts. Wassenaar experts had worked on this very complicated issue for over a year, and several U.S. agencies were intimately involved in developing our policy, including State, Defense, Commerce, Justice and the National Security Agency.

The Attorney General and the Deputy Secretary of Defense wrote letters to their foreign counterparts, and NSA worked closely with similar agencies in other countries. The Deputy Secretary of State and senior National Security Council officials also made personal contacts in support of the U.S. approach, and our embassies in Wassenaar capitals conducted a series of demarches. And our ultimate success in achieving consensus, which also took other countries’ concerns into account, would not have been possible without the extraordinary personal efforts of Under Secretary of Commerce David Aaron, who had personally worked this issue for more than two years –- including through many bilateral meetings with other leading encryption exporting-countries -- and led the "end game" negotiations on encryption at the Wassenaar plenary in Vienna last December.

If the multilateral regime agrees on a change, particularly in a control list, these are implemented by amendment to the Export Administration Regulations by the Commerce Department for dual-use items, and by amendments to the International Traffic in Arms Regulations by the State Department, as appropriate, to reflect our international commitments.


Nuclear Suppliers Group (NSG)

With 35 member states, the Nuclear Suppliers Group (NSG) is a widely accepted, mature, and effective export-control arrangement. China is the only major nuclear supplier which is not a member of the NSG, primarily because it has not accepted the NSG policy of requiring full-scope safeguards as a condition for supply of nuclear trigger list items to non-nuclear weapon states. We hope that China will decide to adopt full scope safeguards. However, China has taken a major step toward harmonization of its export control system with the NSG Guidelines by the implementation of controls over nuclear-related dual-use equipment and technology.

The NSG has received inquiries about membership from Belarus, Cyprus, Kazakhstan and Turkey. The NSG continues to consider the issue of whether membership, rather than adherence without membership, is more appropriate for countries which are not suppliers but merely transit states for nuclear transactions.

The NSG’s 1998 Plenary in Edinburgh, Scotland marked the twentieth anniversary of the publication of the Nuclear Suppliers Guidelines and many years of landmark advancements in creating an effective control regime. Over the past seven years the NSG has established a Dual-Use Regime (DUR), agreed to require full-scope safeguards as a condition of nuclear supply, created an effective Joint Information Exchange, and strengthened controls over technology and retransfers. The NSG continues efforts to update and clarify its guidelines and control lists.

To promote transparency, the NSG sponsored a 1997 seminar in Vienna to explain the export control regime. The seminar was widely praised for bringing together delegates from 76 countries for in-depth, non-polemical discussions between NSG members and non-members to clear up misconceptions about the export-control regime. The NSG is currently preparing to follow-up the Vienna effort with a transparency seminar in New York during the run-up to the 1999 Preparatory Conference on the Treaty on the Non-Proliferation of Nuclear Weapons (NPT PrepCon).


Zangger Committee

The NPT Exporters (Zangger) Committee, the other multilateral nuclear non-proliferation regime, continues to demonstrate its importance as the interpreter of Article III.2 of the Nonproliferation Treaty. For example, although continuing to decline NSG membership, China became a member of the Zangger Committee in October 1997. More recently, Committee members issued a statement deploring the Indian and Pakistani nuclear tests -- the first time the Zangger Committee has ever issued a statement not directly related to publication of its guidelines. The Zangger committee is currently considering a U.S. proposal to add uranium conversion technology to the trigger list and is preparing for the upcoming NPT review conference in 2000.


Missile Technology Control Regime (MTCR)

Since at least the early 1980s, the United States has been working to halt the spread of missiles capable of delivering Weapons of Mass Destruction (WMD). The Missile Technology Control Regime (MTCR) has been our primary means of achieving this objective since its establishment in 1987 with seven partners. The 32 MTCR Partners control their own exports of missile-related items consistent with a common export control policy and encourage all countries to adhere to this policy.

But the MTCR is not solely an export control regime. Largely due to U.S. leadership, the MTCR Partners are increasingly focused on steps they can take individually or collectively to impede non-member missile programs and their intake of equipment and technology. This reorientation of the Regime includes: a broad outreach program to non-members, in order to increase awareness of the global missile proliferation threat; urging countries that have engaged in missile proliferation to desist; urging other suppliers to regulate their exports in accordance with international norms; increasing policy coordination and information sharing; and working to stop shipments of concern.

Interagency coordination is an integral part of our efforts to realize these goals. State leads standing interagency groups that map out and implement our participation in the Regime, interpret and evaluate possible changes to the MTCR Annex, evaluate proposed U.S. exports for proliferation concerns, and identify and try to stop shipments of missile proliferation concern. These efforts involve the Arms Control and Disarmament Agency, the Intelligence Community, the Department of Commerce, the Department of Defense, the Joint Staff, and other agencies as appropriate. We also rely heavily on these agencies’ expertise to support continuing U.S. leadership of a wide range of MTCR activities. For example, representatives from the Commerce Department and the Customs Service have served as discussion leaders at several MTCR-sponsored workshops on priority nonproliferation issues, including transshipment and brokering.

Over the course of the MTCR’s eleven-year history, the Regime has made important strides in slowing missile proliferation worldwide. In particular, the MTCR Partners’ efforts have: induced most major suppliers to support the MTCR Guidelines, reduced the number of MTCR-class missile available to proliferators by reducing the number of countries with MTCR-class programs, and added countries with significant economic and political potential to the MTCR to increase its influence and capabilities. The MTCR Partners also have cooperated to halt numerous shipments of proliferation concern and have established the MTCR Guidelines and Annex as the international standard for responsible missile-related export behavior.


Australia Group

Since its inception in 1985, the now 30-member Australia Group has been committed to ensuring that member countries’ industries do not knowingly or unwittingly assist foreign chemical or biological weapons (CBW) programs. In addition, the AG enables participants to coordinate nonproliferation and export control efforts and to discuss:

    1. CBW threats, concerns, and trends, including those related to CBW terrorism;
    2. participants’ experiences in implementing and enforcing CBW export controls; and
    3. (c) increasing the effectiveness of national CBW nonproliferation and export controls measures.

The U.S. has led efforts in the AG to focus attention on regional proliferation and CBW terrorism, and to address the problem of the proliferation threat emanating from programs in non-member countries and their non-member suppliers.

Interagency coordination is key to our continued successful leadership role in the AG. Our interagency delegation, which includes representatives from ACDA, Commerce, Customs, OSD, and the Intelligence Community, meets throughout the year under State leadership to discuss U.S. proposals and goals for the AG and implement U.S. policy. In addition, State leads interagency working groups that review proposed U.S. exports for CBW proliferation concerns and that identify and try to stop foreign shipments of concern.

The AG has been a key tool in our fight against CBW proliferation. Through harmonized export controls on dual-use chemicals, production equipment, and other items, AG members have succeeded over the years in disrupting the flow of materials and technology from western suppliers to CBW proliferators –- including Libya and Iran –- with little or no impact on legitimate trade. This has made the proliferators’ search for items like chemical precursors and chemical production equipment much more difficult and expensive. As a result, countries like Iran have been forced to seek alternate suppliers. AG countries in turn share information and coordinate approaches to non-AG participants to urge them to adopt AG controls and observe global CBW nonproliferation norms.


Wassenaar Arrangement

I will go into somewhat greater detail regarding the Wassenaar Arrangement, which is not only the newest of the multilateral nonproliferation regimes – it became operational only in late 1996 – but also because its scope is somewhat broader than the NSG, MTCR and Australia Group.

Although the COCOM parties were responsible for initiating development of the Wassenaar Arrangement, the successor regime differs significantly in its goals and procedures, given the changed strategic environment. COCOM was designed as an institution of the Cold War to respond to the threat posed by the Soviet Union and its allies. The West sought to maintain its qualitative edge on the battlefield by a virtual prohibition on sales of arms to "communist countries" and by controlling the export of strategic products and technical data.

As the original threats of the Cold War diminished, new threats to global security began to emerge, including the spread of weapons of mass destruction and their delivery systems. This led the U.S. and other countries to develop and enhance worldwide nonproliferation regimes, such as the NSG, MTCR and Australia Group. The Wassenaar Arrangement extends and complements this development. And it begins, as did these other regimes, with the initial elements essential to getting underway the practical work — a framework, basic guidelines, and lists.

Wassenaar has established lists of munitions and dual-use goods that all members agree to subject to their national export controls. While the United States controls more than is on the Wassenaar lists, it is undeniably true that some members would have controlled less -- probably much less -- if there were no multilateral agreement on such lists. Indeed, only consistent high-level pressure from the United States ensured that there would even be a successor to COCOM.

The Wassenaar Arrangement represents an initial international framework. We are working to develop this more fully. But it already represents some notable achievements for U.S. foreign policy. For the first time, there is a global mechanism for controlling transfers of conventional armaments, and a venue in which governments can consider collectively the implications of various transfers on their international and regional security interests. In view of the close association between advanced technologies, including production technologies, and modern battlefield weapons, sensitive dual-use technologies receive much of the same scrutiny as do arms.

In the short period of time since its inception, Wassenaar has made useful contributions toward constraining the proliferation of conventional arms and dual-use technologies. Even before its establishment, the regime served to attract countries worldwide wishing to join the first post-Cold War security framework. To meet the membership criteria, they have taken steps to adhere to the policies of the other nonproliferation regimes, and to establish effective export controls. Most importantly, all of the participating countries currently maintain national policies to prevent the transfers of arms and sensitive dual-use technology for military purposes to Iran, Iraq, Libya and North Korea. This is a critical requirement that the United States insisted on—-and will continue to insist on—-in examining the credentials of new members.

The United States has sought and obtained commitments through sensitive, high-level negotiations that produced bilateral agreements with Russia and other prospective members to close down their sales in conventional arms and related technologies to Iran and forego any new contracts involving these goods and technologies. The establishment of Wassenaar, through U.S. leadership, is one of the reasons why arms transfers to state sponsors of terrorism has diminished.

The Wassenaar Arrangement provides a venue in which governments can consider collectively the implications of various transfers on their international and regional security interests. Individual Participating States also may exchange information on any topic that they wish to bring to the attention of other members, such as emerging trends in weapons programs, projects of concern, and the accumulation of particular weapons systems.

Through transparency and consultation, suppliers of arms and dual-use items can develop common understandings of the risks associated with their transfers and assess the scope for coordinating national control policies to combat these risks.

The Arrangement's Specific Information Exchange requirements involve semi-annual notifications of arms transfers, currently covering seven categories derived from the UN Register of Conventional Arms (including model and type information). Every six months, members also report the aggregate number of licenses granted for exports to non-members of items on the dual-use Sensitive List, and the total number of denials of Basic List dual-use transfers. Members are also required to report within 30-60 days any denials of Sensitive List items.

While Wassenaar does not oblige Participating States not to "undercut" another member’s license denials, there is an obligation to inform other Participating States within 30-60 days of its approval of a license that has been denied by another member for an essentially identical transaction within the last three years.

The goal is to foster common and consistent export policies, while eliminating inadvertent undercuts by other members, and to help members detect and prevent destabilizing accumulations or emerging trends or threats that may undermine the regime's objectives.

However, as Secretary Albright stated in a speech at the Stimson Center on June 10, 1998, the Wassenaar Arrangement "has not yet reached its potential." This year, Wassenaar members will conduct what we hope will be the first of periodic reviews its operations, and the United States will introduce a number of initiatives aimed at increasing the effectiveness of the Arrangement.

In her Stimson Center speech, Secretary Albright made clear that the United States wants Wassenaar "to be recognized as the institution where responsible nations take practical steps to prevent and address the dangers arising from irresponsible arms exports." Among the initiatives we will pursue in the context of the 1999 review will be to add additional categories to Wassenaar’s arms transfer reporting requirements. We hope to conclude an agreement on guidelines for transfers of man-portable air defense systems (MANPADS) to ensure they do not fall into the hands of terrorists and criminal groups. We will also propose improvements to the "undercut" procedures.

The Wassenaar Arrangement conducts outreach activities in order to encourage effective export controls and appropriate national policies for transfers. These outreach activities may be conducted, subject to the Arrangement’s confidentiality guidelines, by the Plenary Chairman, Secretariat personnel, or by representatives from Participating States, in order to keep non-members informed about the group's activities as well as to prepare prospective members for admission.



We have a clear preference for export controls that are exercised in conjunction with multilateral regimes. We will continue to attempt to persuade our trading partners to exercise their domestic controls in a manner consistent with ours. This approach helps ensure U.S. security, and it is good for business.

We agree on the need to exercise rigor and discipline in the promulgation and application of unilateral controls. But the United States must continue to exercise leadership in stemming the proliferation of weapons systems and related technologies that threaten regional stability and the security of the United States, our allies and armed forces.

Indeed, no other country has the same global perspective and global responsibilities as does the United States, and our export control system properly reflects these responsibilities. I know that this committee also recognizes the critical importance of ensuring that unilateral controls remain available when they are in the overall national interest, and when we are not successful in gaining the support of other countries in addressing a particular concern. Multilateral controls thus represent a critical, but not the only, component of a successful export control process.

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