June 13-25, 2003
EXPORT
CONTROLS IN THE U.S.
1. “Global R&D Sparks Export-Control Talk,” By George Leopold, Electronic
Engineering Times, June 23, 2003.
2. Export Administration Regulations: Encryption Clarifications and Revisions,”
Bureau of Industry and Security, Department of Commerce, June 17, 2003.
3. “California Firm Settles Allegations of Illegal Exports of Medical Equipment
to Iran,” Bureau of Industry and Security, Department of Commerce, June 24,
2003
4. “Bassem Alhalabi Settles Charges Concerning the Illegal Export of Thermal
Imaging Camera to Syria,” Bureau of Industry and Security, Department of Commerce,
June 24, 2003
5. “California Company, President Penalized for Making False Statements in
Connection with an Attempted Export to Iraq,” Bureau of Industry and Security,
Department of Commerce, June 24, 2003
6. “US and EU Agree on Halting Spread of Weapons of Mass Destruction,” By
Judy Dempsey, Financial Times, June 26, 2003
7. “Bosnia, USA Sign Memorandum on Arms Export Control,” BBC Monitoring International
Reports, June 17, 2003
8. “Bush Welcomes IAEA Statement on Iran's Nuclear Program,” White House Report,
19 June 2003
9. “South Asia: State Department Clarifies End of Sanctions,” By Mike Nartker,
Global Security Newswire, June 24, 2003
INTERNATIONAL
NONPORLIFERATION AND EXPORT CONTROLS
Multilateral Regimes
1. “Nukes on the Loose. Time for a New Nonproliferation Regime,” By Henry
Sokolski, The Weekly Standard, June 23, 2003
2. “Australia to Host Forum on Mass Destruction Weapons 9-10 July,” BBC Worldwide
Monitoring Report, June 26, 2003
3. “Japan to Host Export-Control Dialogue in Asia to Curb WMD,” Japan Economic
Newswire, June 19, 2003
4. “EU Foreign Ministers Approve Action Plan for Weapons of Mass Destruction,”
European Report, June 18, 2003
Romania
5. “Romania to Strengthen Control of Biological, Chemical Materials,” BBC
Worldwide Monitoring Report, June 17, 2003
Slovakia
6. “Former Nationalist MP Charged with Illegal Arms Exports,” BBC Monitoring
International Reports, June 16, 2003
7. “Iran Denies Seeking to Buy Missile Technology from Japanese Firm,” Agence
France Presse, June 16, 2003
EXPORT CONTROLS
IN THE U.S.
1. “Global R&D Sparks Export-Control Talk,” By George Leopold, Electronic
Engineering Times, June 23, 2003 (for personal use only)
The Commerce Department considers some U.S. transfers of commercial technologies
to foreign workers as exports. In some cases, U.S. companies may be required
to obtain a deemed-export license before giving foreign-born employees access
to sensitive technologies.
Industry executives in Silicon Valley have begun to raise concerns about these rules. Meanwhile, government investigators warn that vulnerabilities in the deemed-export control system could help China and other countries improve their military capabilities.
<…> Kathleen Walsh, a senior associate at the Stimson Center and investigators at the congressional General Accounting Office (GAO) have concluded that the current deemed-export control regime is ill-equipped to deal with the exodus of Chinese engineers. "We need something between licensing and decontrol" of deemed exports, Walsh said. "You need to monitor this. We need some kind of notification system."
Congress will revisit the issue when it considers annual legislation to reauthorize the Export Administration Act. All previous attempts to renew the law over the last decade have failed, and observers are pessimistic about its chances of passage this year. As a result, the law is renewed each year by presidential directive, with few substantive changes made to U.S. export control laws. This has created new problems for the fast-paced high-technology industry, which has argued that it loses out on sales to China due to antiquated export laws.
Chinese and Indian engineers increasingly speak at industry conferences about applying the expertise they have gained working at U.S. companies or at subsidiaries in their home nations. But concerns about engineering skills go both ways. Robert Yung of Intel China, a panelist at the recent Design Automation Conference, said Chinese government officials often complain to him about Intel's recruitment of China's top engineering graduates. Yung said his response was that Intel is serving as a "training ground" for young Chinese engineers.
The cross-pollination of engineering talent only serves to complicate the deemed-export debate. Last September, GAO identified two key weaknesses in the U.S. control regime. It found that Commerce Department screening of visa applications failed to include "thousands of immigration change-of-status applications from foreign nationals already in the United States who may seek work in U.S. high-tech firms." It also found that export control officials lack an effective monitoring program to determine whether U.S. companies seeking deemed-export licenses are complying with security guidelines designed to control access to sensitive technologies.
In response to GAO's findings, the Commerce Department said it has initiated discussions with the Pentagon and State Department on a new set of guidelines for deemed-export licenses. It gave no time line, and previous interagency debates about export rules have been contentious. <…>
2. “Export
Administration Regulations: Encryption Clarifications and Revisions,” Bureau
of Industry and Security, Department of Commerce, June 17, 2003.
This rule amends the Export Administration Regulations (EAR) to clarify when
encryption commodities and software may be given deminimis treatment, when
short-range wireless devices incorporating encryption may be given mass market
or retail treatment, and to provide guidance on when exporters are required
to submit encryption review requests. It also expands the authorizations according
to which travelers departing the United States may take encryption for their
personal use, and clarifies that specially designed medical equipment and
software are not controlled as encryption or ``information security'' items
under the EAR. Finally this rule implements changes to
the Wassenaar Arrangement List of dual-use items (agreed upon in the September
2002 meeting and finalized in December 2002) that eliminate from Export Control
Classification Number (ECCN) 5A002 certain types of “Personalized smart cards”
and equipment specially designed and limited to controlling access to copyright
protected data.
3. “California
Firm Settles Allegations of Illegal Exports of Medical Equipment to Iran,”
Bureau of Industry and Security, Department of Commerce, June 24, 2003
The U.S. Department of Commerce announced that Bio Check, Inc. (Bio Check),
of Burlingame, California, has agreed to pay a civil penalty of $22,500 to
settle allegations that the company violated the Export Administration Regulations
(EAR) when it exported medical diagnostic kits to Iran without approval from
the Treasury Department’s Office of Foreign Assets Control (OFAC), and without
filing the required Shipper’s Export Declarations.
The Commerce Department’s Bureau of Industry and Security (BIS) alleged that Bio Check shipped the items to Iran through freight forwarders in the United Arab Emirates and Italy. The settlement takes into account a $32,000 fine that OFAC imposed for violations of its regulations involving the same illegal exports. Bio Check voluntarily disclosed these violations to both BIS and OFAC and cooperated throughout the investigation. BIS administers and enforces export controls for reasons of national security, foreign policy, nonproliferation and short supply. Criminal penalties and administrative sanctions can be imposed for violations of the EAR.
4. “Bassem
Alhalabi Settles Charges Concerning the Illegal Export of Thermal Imaging
Camera to Syria,” Bureau of Industry and Security, Department of Commerce,
June 24, 2003
The U.S. Department of Commerce today imposed a one-year denial of export
privileges on Bassem Alhalabi to resolve charges that Mr. Alhalabi caused
the export of a thermal imaging camera to Syria without the license required
under the Export Administration Regulations (EAR). The Commerce Department’s
Bureau of Industry and Security (BIS) charged that, on March 12, 1998, Alhalabi
caused the export of a thermal imaging camera to Syria in violation of the
EAR. Thermal imaging cameras are controlled for export to Syria for national
security, regional stability, and anti-terrorism reasons.
5. “California
Company, President Penalized for Making False Statements in Connection with
an Attempted Export to Iraq,” Bureau of Industry and Security, Department
of Commerce, June 24, 2003
The U.S. Department of Commerce announced today that Zooma Enterprises, Inc.
(Zooma), of San Diego, California, and its president, Issa Salomi, have agreed
to pay $32,000 in civil penalties to settle charges that they made false statements
to the U.S. Government in connection with an attempted export of medical equipment
to Iraq. Mr. Salomi will pay a $24,000 fine and Zooma will pay an $8,000 fine.
The Commerce Department’s Bureau of Industry and Security (BIS) charged that
Zooma violated the Export Administration Regulations (EAR) by listing the
country of ultimate destination on a Shipper’s Export Declaration as Jordan,
when the destination was, in fact, Iraq. BIS also charged that Issa Salomi
committed three violations of the EAR by filing a petition with the U.S. Customs
Service that falsely represented facts about the sale of the medical equipment,
an ampul filling and sealing machine, including its ultimate destination.
6. “US
and EU agree on Halting Spread of Weapons of Mass Destruction,” By Judy Dempsey,
Financial Times, June 26, 2003 (for personal use only)
The US and the European Union yesterday agreed on ways to stop the proliferation
of weapons of mass destruction, a decision that could start the rebuilding
of the transatlantic relationship ruptured during Iraq war.
<…> The statement, set out in three parts and agreed after long negotiations, sought to reconcile US and EU policy towards WMD, with Washington showing a greater preference for supporting multilateral regimes to combat the spread of WMD and the Europeans recognizing the new global threats of the post-cold war era.
<…>
Although use of force was not specifically mentioned, the statement was emphatic
that "other measures in accordance with international law may be needed
to combat proliferation". Indeed, there was a tough warning for countries
that ignore or cheat on treaty obligations. "We are committed to dealing
effectively" with those, said the statement. The EU and US would together
"strengthen the international system of treaties and regimes against
the spread of WMD" and ensure strict implementation and compliance. In
practice, the US and EU have agreed to beef up the IAEA, making additional
protocols such as enhanced inspections the norm for nuclear co-operation.
The IAEA's budget too will be increased "to ensure the credibility"
of its verification system. No amount was agreed. "It is up to the IAEA
to tell us their needs," said an EU diplomat.
Export controls on materials and technologies related to WMD and their delivery
systems will be strengthened, with tougher national controls leading to criminal
penalties for illegally exporting such material. Assistance will be given
to enforce national export control systems and intelligence sharing will be
stepped up.
7. “Bosnia,
USA Sign Memorandum on Arms Export Control,” BBC Monitoring International
Reports, June 17, 2003 (for personal use only)
The USA and Bosnia-Herzegovina have signed a memorandum on understanding which
will help Bosnia-Herzegovina to control the export of sensitive military technology.
<…>
Deputy US State Secretary Richard Armitage met Bosnia-Herzegovina Prime Minister
Adnan Terzic and Foreign Minister Mladen Ivanic. Armitage and Ivanic signed
a memorandum on understanding on the system of licenses for controlling the
exports which will help Bosnia-Herzegovina to develop a state control system
for the control of sensitive military technology.
8. “Bush
Welcomes IAEA Statement on Iran's Nuclear Program,” White House Report, 19
June 2003
The White House welcomed a June 19 statement by the board of the International
Atomic Energy Agency (IAEA) asking Iran to allow further inspections of its
reactor sites.
<…> The IAEA board encouraged Iran not to introduce nuclear material
at its pilot enrichment plant, as a confidence building measure, and called
on Iran to permit the IAEA to take environmental samples at locations inside
Iran, and to ratify an additional protocol making certain that Iran is acting
in a way that provides assurances to the international community of the peaceful
nature of Iran's nuclear activities. <…>
9. “South
Asia: State Department Clarifies End of Sanctions,” By Mike Nartker, Global
Security Newswire, June 24, 2003
The U.S. State Department issued a notice in the Federal Register last week
seeking to clarify export control policy toward India and Pakistan by reiterating
that all U.S. sanctions against the two countries have been lifted. The notice
re-expressed the department’s policy of considering export license requests
for defense-related exports to India and Pakistan on a case-by-case basis,
rather than the previous policy of denial established in 1998. The notice
does not represent a new shift in U.S. policy, but instead seeks to clarify
lingering uncertainties about the status of U.S. sanctions against India and
Pakistan. <…>
INTERNATIONAL NONPORLIFERATION AND EXPORT CONTROLS
Multilateral Regimes
1. “Nukes on the Loose. Time for a New Nonproliferation Regime,” By Henry
Sokolski, The Weekly Standard, June 23, 2003 (for personal use only)
The US has only begun to stop the spread of weapons of mass destruction. This
is the core message of George W. Bush's May 31 speech in Krakow, where he
announced his intent to work with like-minded states to interdict nuclear,
chemical, and biological weapons and the missiles to carry them. For the moment,
his initiative will concentrate on harmonizing the interdiction laws of our
friends. In trying to develop common rules of what goods are illicit, though,
the need for more generalized rules will quickly become apparent.
<…> Trying to close these loopholes country by country can help, but it's hardly sufficient. Determined proliferators will cheat or refuse to cooperate. That's why an enforceable international prohibition on trafficking in weapons of mass destruction needs to be created, like those already in place against piracy and slave trading. Any nation's attempt to redeploy chemical, nuclear, or biological warheads outside of its borders or to ship the key means to make them should be deprived the protection of international law. <…> How could this be done? The key ingredients needed to make strategic weapons are already internationally recognized. The International Atomic Energy Agency (IAEA) lists all special nuclear materials. The Australia Group catalogs key chemical and biological weapons-related items. The Nuclear Suppliers Group identifies critical dual-use nuclear gear and prohibits the export of enrichment and reprocessing plants, and the Missile Technology Control Regime does the same for cruise and ballistic missiles. Meanwhile, U.S. law requires American businesses to pre-announce most of these exports publicly. Several friendly nations have similar laws. These practices should help in creating the international common usage that's required.
<…> First, all nations should give prior public notification of their export of nuclear, chemical, or biological weapons-related items. As the number of cooperating nations grows, so too will pressures for those not participating to comply. The price for noncompliance should be clear: any transfer that is not properly pre-announced should be subject to interdiction.
Second, no nation should be allowed any longer in peacetime to redeploy nuclear, chemical, or biological weapons outside its borders. This rule is one the United States, with its various submarine-launched ballistic and cruise missile systems, long range bombers, air-launched cruise missiles, and sea-based strike aircraft, can easily live with. Any nation violating this rule, whether friendly (e.g., Pakistan) or not (e.g., North Korea), should, again, be subject to interdiction.
Finally, if there is support for stronger action, exports made outside the procedures of the IAEA, Australia Group, Nuclear Suppliers Group, and (perhaps) the Missile Technology Control Regime might be banned and targeted for interdiction. This rule would clearly put a bind on nonmembers of these organizations. It would apply not just to Iran, which has announced its desire to export its nuclear expertise, but to China, North Korea, and Pakistan, who trade in nuclear and missile technology. It also could include Israel, which has exported missile technology to China, and India, a state that announced a military cooperative agreement with Iran and its intent to export missile technology internationally. Once agreement is reached on one or more of these rules, the United States or a like-minded nation should submit them to the U.N. Security Council for adoption. It should be made clear, however, that if any nation learns of an export that violates the proposed rules before the U.N. puts the proposal to a vote, that nation should still try to block the export or pass the information it has on to a state that can. After our experience waiting on the U.N. to act on Iraq, we should not leave the world's security hostage to delay.
Two other new rules would be useful. First, the United States and its friends should announce that states that violate or withdraw from the Nuclear Nonproliferation Treaty have no right to the atomic technology they have accumulated as signatories, since they acquired it under the false pretense of its being dedicated to peaceful purposes. Only nations that have not acquired the means to make nuclear weapons should think they can withdraw from the NPT without paying a price. Everyone else, including North Korea or its imitators, should be forewarned.
Second, the United States should insist--as it has now begun to do in the case of Iran--that a proper reading of the NPT will no longer allow states that join without weapons to get everything they need to break out in weeks to have an entire arsenal. For at least the next few decades, there is no legitimate reason for any state to separate plutonium chemically from spent fuel, or to continue to use or make highly enriched uranium. Anyone building new plants to do so, like North Korea or Iran, should simply be seen as developing bombs. This should put such states outside of the treaty and, again, of the protections of international law.
2. “Australia
to Host Forum on Mass Destruction Weapons 9-10 July,” BBC Monitoring International
Reports, June 26, 2003 (for personal use only)
Australia will host the second meeting of the Proliferation Security Initiative
(PSI), a coalition of countries aiming to develop practical ways to prevent
the global spread of weapons of mass destruction. The meeting in Brisbane
on 9-10 July will build on the outcomes of the first meeting held in Madrid
on 12 June attended by Australia, France, Germany, Italy, Japan, the Netherlands,
Poland, Portugal, Spain, the United Kingdom and the United States of America.
The group recognizes the need to build a broad and effective partnership of
states prepared to play a part in impeding the international traffic in weapons
of mass destruction and missiles. The mainstay for stopping the spread of
these weapons remains the global system of international treaties, export
control regimes and other tools built up over several decades of multilateral
negotiations. The reality is some states cheat on their obligations or resist
joining these international regimes. The Australian government is deeply concerned
that such behavior by maverick states, especially when coupled with terrorism,
exposes the world to the use of nuclear, chemical or biological weapons with
terrible consequences. Participants in the Proliferation Security Initiative
have recognized that new thinking is needed and practical measures must be
developed to raise the barriers to the menace of the proliferation of weapons
of mass destruction. <…>
3. “Japan
to Host Export-Control Dialogue in Asia to Curb WMD,” Japan Economic Newswire,
June 19, 2003 (for personal use only)
Japan plans to host high-level dialogue on export control in Asian and Pacific
regions in October in a bid to prevent proliferation of weapons of mass destruction
(WMD). 'We want to launch a so-called Asia export-control initiative to prevent
WMD. We have already committed to strict export control, but it is important
to expand the system to the Asia region,' Economy, Trade and Industry Minister
Takeo Hiranuma said at a press conference after a cabinet meeting. The move
comes after revelations that Meishin, a Tokyo trading house owned by a North
Korean, allegedly tried to export current converters to North Korea via Thailand.
Current converters can be used in missile development. According to Hiranuma,
the dialogue will include director general-level officials from Japan, the
United States, Australia, China, South Korea, Hong Kong, Thailand, Malaysia
and Singapore. The participants will discuss ways to cooperate in preventing
procurement of materials that could be used for WMD. <…>
4. “EU
Foreign Ministers Approve Action Plan for Weapons of Mass Destruction,” European
Report, June 18, 2003 (for personal use only)
Presenting the issue to Ministers, EU foreign policy chief Javier Solana reportedly
highlighted three aspects: the need to reinforce the International Atomic
Energy Agency (IAEA), as well as its budget; strengthening export controls;
and the importance of multinational mechanisms. Ministers adopted a set of
Conclusions which endorsed both the "basic principles" document
and the Action Plan. They asked the Political and Security Committee (PSC)
and other Council bodies, in co-operation with Mr Solana and the Commission,
to begin work immediately on implementing the Plan. According to the Council's
Conclusions, the Plan is not supposed to be "exhaustive", rather
a "first base to start without delay" that "will have to be
adapted in the course of its implementation". The Presidency, Mr Solana
and the Commission should report to the PSC by the end of 2003. The Council
also examined a draft declaration on WMD to be adopted by the EU Summit on
June 19-10 in Salonika, Greece.
The Council Conclusions make clear that proliferation of WMD and means of delivery such as ballistic missiles "constitutes a threat to international peace and security". Terrorists pose an "additional threat" in this context. The Action Plan is described as an "initial work programme". The "basic principles" document spells out the range of responses available for dealing with non-compliant third countries - "those who cheat". "Coercive measures" (such as sanctions, interceptions of shipments and the use of force) could be "envisioned" after political and diplomatic routes, including via international organisations such as the IAEA, had failed. The use of force in accordance with the UN Charter is described as a "last resort". In an echo of the debate on Iraq, it is argued that the "UN Security Council should play a central role". In particular, the role of the UN Security Council - as the "final arbiter on the consequences of non-compliance" - needs to be "effectively strengthened".
Short-term
measures.
<…> The Action Plan suggests a move to more effectively address cases
of suspected non-compliance with the Chemical Weapons Convention. Member States
and acceding countries should agree, it says, to support any "challenge"
made by another Member State, acceding country or state or group of states
within the CWC, in the absence of specific information disproving the basis
for a challenge inspection. Any extra costs would again be covered nationally.
The EU, according to the Action Plan, should also take a number of steps to
become a "leading co-operative player in the export control regimes",
for example in ensuring that there are EU-coordinated positions.
Longer-term
measures.
As for measures to be taken in the coming months or the longer term, the Action
Plan argues in general for "mainstreaming" non-proliferation policies
into the EU's wider relations with third countries. The EU will consider the
introduction of an "effective stick and carrot" policy linked to
non-proliferation commitments, in particular in the context of co-operation
agreements or assistance programmes. Relevant working groups would be tasked
to review EU policy towards particular countries. At the same stage, the "basic
principles" paper makes clear that the best solution is for countries
to no longer feel that they need WMD, meaning political solutions should be
found where possible to the problems that lead countries to seek such weapons.
Positive and negative "security assurances" will seemingly have
a part to play.
The EU's funding commitments for global efforts to tackle WMD are broached, in the context of G8 commitments and the post-2006 financial perspectives. The creation of a specific EU budget line for non-proliferation and disarmament "should be envisaged", with Member States encouraged to contribute on a national basis. The efforts should include measures aimed at reinforcing non-proliferation expertise, science and technology.
The EU should give a "special focus" to WMD proliferation and the Mediterranean, for example by carrying out a WMD threat assessment and including specific non-proliferation issues in dialogue. <…> The Action Plan also looks at strengthening compliance on biological and chemical weapons proliferation. The EU, it is said, will consider giving support to states with administrative or financial difficulties in implementing the Chemical Weapons Convention. "Best practice guidelines" for national legislation on pathogenic micro-organisms and toxins are mooted. The creation of an EU Centre for Disease Control "should be analyzed". A dialogue with the European biotech industry will be initiated and EU-US industry dialogue "encouraged".
There are also suggestions for reinforcing the efficiency of export controls in an enlarged Europe, such as developing a system for easier identification of items under control, and using "peer review" in all Member States and acceding countries. It is also foreseen to set up a program of assistance to states in need of technical knowledge in the field of export control.
Romania
5. “Romania to Strengthen Control of Biological, Chemical Materials,” BBC
Worldwide Monitoring, June 17, 2003 (for personal use only)
Romania will soon take a range of measures for strengthening the control of
biological and chemical products, in an effort to curb the risk of such products
being diverted to military or terrorist use. Romania agreed to complete the
national list of exports control with 14 biological agents that are human
pathogens, and adopt a national programme that should commit several countries
in the Asia-Pacific to the joint efforts made by the countries in the region
for chemical and biological non-proliferation.
<…> Romania will soon adopt new transparent procedures that encourage
the improvement of data exchange between the AG members. The AG members accepted
Romania's proposal regarding the working out and distribution of an electronic
collection of national profiles of the member states in exports control. This
product is useful in carrying out specific activities of licensing and implementation.
<…>
Slovakia
6. “Former Nationalist MP Charged with Illegal Arms Exports,” BBC Monitoring
International Reports, June 16, 2003 (for personal use only)
Vitazoslav Moric, former deputy for the Slovak National Party (SNS), has been
charged with illegally trading in weapons. His firm attempted to sell military
equipment to communist North Korea. "Prosecution has been started against
the former managing director of the Armex company, his subordinate, and the
former director of the Office for Armaments, Equipment, and Material at the
Defense Ministry," confirmed Interior Minister Vladimir Palko. They have
been charged with violating the regulations on handling controlled goods.
"In part, this was an instance of a committed crime and, in part, an
attempt."
<…> The case happened in 1998 when Moric was a deputy. Armex representatives agreed with Chomma Trading Corporation from Pyongyang, DPRK, on the supply of two sets of airport equipment. Armex was planning to deliver them from Ukraine. They made a deal with a Ukrainian company but they kept it secret that the airport equipment was intended to go to North Korea. <…> Reportedly, the Slovak Army has never requested such equipment. "What they did is a grave sin in the arms business," says Palko. "When military material is exported, it must be clear who the military user will be; this is where they cheated."
The investigator is documenting the advantages that they may have gained. For example, if they had declared the actual user, they might have never received the permission. Michal Dzimko, the office director at the Defence Ministry who issued the certificate, was also deputy chairman of the Armex board of directors at that time.
Iran
7. “Iran Denies Seeking to Buy Missile Technology from Japanese Firm,” Agence
France Presse, June 16, 2003 (for personal use only)
Iran denied that it had attempted to import missile technology from a Japanese
company, following the arrest in Japan of five people in a crackdown on exports
that also implicated North Korea. <…> Last Thursday, Japanese police
arrested the president and four employees of a Tokyo manufacturing company,
Seishin Enterprise Co. Ltd, on suspicion of illegally exporting to Iran equipment
that could be used to develop solid fuel for missiles. But while Asefi said
technology from Japan had been imported, he insisted that it was not for military
purposes.
"Our cooperation with Japanese companies is within the laws of each country, and the said imports were for the manufacture of electrical goods by some businesses, some of which are linked to the defence ministry," said Asefi. "But you can find these electrical appliances on the domestic market, and they are even exported. And furthermore, they are good quality," he added. <…>