Breaking Down the Barricades: Final Report of the Project on Export Controls in a Changing...

This Center for Strategic & International Studies report on the issues surrounding export controls was born in response to the collapse of the Warsaw Pact, removal of the Berlin Wall, and the breakup of the Soviet Union. These tumultuous events brought about a rethinking of the West's export

control policies. CSIS supported a study by a group of trade and technology experts beginning in 1991 to examine what role, if any, export controls should serve in the emerging world order. The study outlined below represents the collective wisdom of ten distinguished project members about the changes needed in the U.S. export control policy. In March 1994 COCOM was abandoned, beginning a new period in which there is no existing regime for coordinating export controls multilaterally.

The report consists of five discussions concerning the purposes of export controls, their effectiveness, the role and rights of exporters, the costs of export controls, and the burdens and costs of export controls including some case studies.

Purposes and objectives. The United States and its allies adopted cold war export controls as a means of keeping the Eastern Bloc from deriving military advantage from Western technologies. The Coordinating Committee for Multilateral Export Controls (COCOM) was established in the late 1940's for this purpose. Membership included most NATO members plus Australia and Japan. The U.S. Export Administration Act codified these objectives, permitting controls for national security or foreign policy purposes.

Collapse of the Soviet Union and Warsaw Pact changed the objectives of controls. Today, objectives focus more on questions of proliferation of weapons of mass destruction and embargoing rogue nations (Cuba, Iran, North Korea, former Yugoslavia).

COCOM kept many key technologies from the Soviet Union during the cold war. However, the growth of commercial markets for advanced technology and the emergence of new suppliers fundamentally challenged COCOM's mission of denying technology. Further, threats to the U.S. national interests have changed. The U.S. currently imposes embargoes on Iraq, Iran, and Yugoslavia. But current regulations restrict only the most advanced technologies; and forty-eight of fifty chemicals on the restricted (for export) list are available from alternative sources.

The current export system is weakened by its distinction between foreign policy and national security controls, a distinction that has largely lost its meaning. Such a distinction is largely artificial. U.S. interests are more comprehensive, requiring a broader conception of what national security and foreign policy goals are, including national economic interests. Many controls create resentment among newly industrializing countries (NICs) that want advanced technology for peaceful purposes. Controls create a black market in controlled technologies, and the U.S. government relinquishes a valuable lever of influence. To achieve the objectives of controls in the post cold war world, the United States should not concentrate on technology restrictions, but rather elevate diplomatic efforts to stem proliferation.

Export controls should be applied only as part of a structured, comprehensive national response to specific proliferation concerns. They should not be the sole response unless there is expectation they will succeed in a reasonable time. Unilateral controls cannot be expected to be effective and should not be used.

Effectiveness. Efforts to control technologies that are in wide use or which can be obtained from many suppliers worldwide cannot succeed without multilateral coordination. The agreement to abandon COCOM in 1994 reflects a desire of COCOM partners to regularize trade with former cold war adversaries. Seemingly an appropriate goal, it must be understood that nuclear threat remains. More effective means are required to effectively retard or remove trade in materials used to manufacture nuclear weapons.

U.S. exporters are placed at a disadvantage under a system of national discretion controls. To be effective, export controls must have significant national benefits in excess of their high costs. Controls are costly to U.S. exporters via compliance expenses, lost sales, added difficulty in servicing clients, higher transaction costs, and reduced loyalty to American brands. Multilateral coordination among all significant suppliers is fundamental if controls are to be effective and fair. Unilateral U.S. controls should be allowed only where the United States is the only significant supplier or temporarily while a multilateral regime is being established.

To assure that controls are effective, a high level executive branch organization should be assigned to:

a) coordinate and lead the policy debate on the purposes to be served by export controls;

b) resolve jurisdictional disputes among licensing agencies;

c) give clarity to control regulations;

d) formulate legislation to establish and protect the right to export;

e) insure that controls are effectively meeting their stated objectives and evaluate their costs and benefits.

Need for Policy Leadership. Proliferation of weapons of mass destruction and the means to deliver them is a problem of the highest priority. While export controls alone cannot solve this problem, there must be a role for export controls and other measures together to attack this problem. The president's September 1993 statement expresses the administration's intentions of harmonizing export controls both domestically and multilaterally.

If good intentions are to become good deeds, constant vigilance and leadership from the administration are necessary. With this leadership, the United States can develop a cogent nonproliferation strategy, encourage the participation of other countries, and avoid shooting itself in the "competitiveness" foot.

Francis A. Lees Professor Department of Economics and Finance St. John's University