Disarmament Diplomacy

US Congressional Study Group Report on Export Controls

Study Group on Multilateral Export Controls: Final Report, April 24, 2001.

Note: the Study Group was established by Congress in October 1999. Co-chaired by a bipartisan Congressional panel, the Group consists of senior US government officials and independent experts from industry and non-governmental organizations. The full report, plus related documentation, is available on the website of the Henry L. Stimson Center, http://www.stimson.org/tech/sgemec/index.html.

Executive Summary

"The system for controlling the export of militarily sensitive goods and technologies is increasingly at odds with a world characterized by rapid technological innovation, the globalization of business, and the internationalisation of the industrial base, including that of defense companies. Although efforts have been made to adapt Cold War processes and regulations to changed circumstances, the current approach to controlling militarily relevant trade has failed to keep pace with changing international conditions and often falls short of adequately protecting US national security interests.

Reflecting growing concern with the impact of the current multilateral export control system on US national security, the Congress in October 1999 called for the creation of a Study Group to 'develop the framework for a new effective, COCOM-like agreement that would regulate certain militarily useful goods and technologies on a multilateral basis.' [Note: COCOM, the Coordinating Mechanism on Multilateral Export Control, operated during the Cold War to regulate the export of dual-use technology and products to the Soviet Union and its allies. It was replaced by the Wassenaar Agreement on Conventional Arms and Dual-Use Goods and Technologies in 1996.] This report represents the consensus findings of the resultant Study Group on Enhancing Multilateral Export Controls for US National Security.

Part I: Reform of the Export Control System is Vital to US National Security in the 21st Century

While export controls continue to be vital tools of US national security policy, they must be adapted to the global economic, strategic, and political realities of the 21st century if they are to enhance US non-proliferation, defense industrial, and alliance objectives. The Study Group therefore considered the implications for effective multilateral export control reform of three factors: (i) the impact of economic globalization; (ii) the emergence of new and diverse threats; and (iii) the changing nature of US national security needs and requirements in the 21st century. The Study Group concluded that a multifaceted approach, comprising step-by-step reform of existing regimes and a new, supplemental framework, is needed in order to keep pace with changing political, economic, and technological conditions and to enhance US national security.

Part II: A Proposed Comprehensive Approach to Multilateral Export Control Reform

To establish a new and more effective framework for multilateral export controls, the Study Group recommends the following three steps:

Recommendation l: Over the short-run, maintain and improve the Wassenaar Arrangement and other multilateral arrangements; over the medium- to long-term, seek to merge the existing multilateral regimes into a single, maximally effective body, beginning with those focused on preventing WMD proliferation.

In the short-term, several steps should be taken to improve the workings of the Wassenaar Arrangement: more robust information exchanges, procedural reforms, and an enhanced role for Wassenaar's Secretariat. Additionally, the Study Group recommends that an Executive Council, made up of representatives from each of the existing multilateral regimes, be formed to improve coordination of licensing, reporting, and enforcement standards among the separate regimes. This Council also should examine the feasibility of combining some or all of the multilateral regimes into a single body over the longer term, if such a merger would raise, not lower, the bar for multilateral export controls.

Recommendation 2: In the interim, work to establish a new supplemental framework for coordinating multilateral export controls based on harmonized export control policies and enhanced defense cooperation with close allies and friends.

A new, supplemental framework for enhancing multilateral export controls would complement the Wassenaar Arrangement and other multilateral export control regimes. The purpose of the supplemental framework would be two-fold: (1) to enhance common security by placing stricter, identical controls on the most sensitive technologies to end-users outside the framework; and (2) to reform export controls within the framework to facilitate defense cooperation with key allies and friends. Participants would represent a 'coalition of the willing,' comprising those states willing to enter into a supplemental multilateral export control arrangement and related commitments in exchange for less restrictive trade among the participating nations. The new framework would be based on an executive-level, multilateral agreement that would entail common export control commitments implemented through binding domestic laws. To overcome foreign policy differences, the framework would rely on a functional approach to export controls that would provide more effective controls over transfer of the most critical technologies to parties outside the framework and allow freer access to arms-related and dual-use technologies within the framework.

Recommendation 3: Seek simultaneous reforms of the US export control process.

Continuing reforms of the US export control system are critical to US efforts to build confidence and support among allies and friends for reform of multilateral export controls. The Study Group encourages the Congress and the administration to reach agreement on the long-term authorization of a balanced and updated Export Administration Act as soon as possible, and to undertake an overhaul of the regulatory policies and processes for approving export licenses for munitions. Reform efforts should enhance US national security and be guided by the need for greater harmonization, predictability, flexibility and dynamism, efficiency, and coherence. Efforts to improve and supplement existing multilateral regimes should proceed in tandem with initiatives to rationalize and streamline the US export control system.

Part III: A Partnership for Change

Successful reform of the multilateral framework for export controls will require effective domestic and international partnerships and, above all, sustained and concerted US leadership.

• Presidential Leadership is Essential

Multilateral reform efforts are unlikely to succeed without strong, sustained presidential leadership and involvement, comprising international engagement as well as direction and oversight of the interagency process in the United States. The Study Group therefore urges President George W. Bush to begin a dialogue with US allies and friends about the need for a new approach to restraints on technology transfers and to launch a coordinated diplomatic initiative to achieve step-by-step reforms of the Wassenaar Arrangement. Additionally, the Study Group recommends that the president make technology transfer issues a high priority in bilateral relations with Russia and the People's Republic of China and urge other allies and friends to do so as well. Finally, continuing efforts to reform US munitions and dual-use export controls are critical. To ensure that reform efforts remain on track, the Study Group urges the president to convene an interagency 'Deputies Committee,' which would be responsible for ensuring that US export control policies are internally consistent, up-to-date, and consistently applied.

• Congress Has a Vital Role to Play in Reform

The US Congress must bear joint responsibility for efforts to create an effective system of controlling militarily sensitive goods and technologies. The Study Group therefore recommends that the US Congress work to reach agreement on long-term reauthorization of the Export Administration Act, then review and reform the Arms Export Control Act (AECA). To ensure that a process of step-by-step reform proceeds prudently and without injury to US national security, the Congress should encourage the committees of jurisdiction to hold hearings on the operation of multilateral export control arrangements, and require the President to continue reporting annually on the results of US efforts to strengthen existing regimes and further promote multilateral approaches to export controls. Congressional support for enhanced US intelligence capabilities and targeted international cooperation programs is also a wise investment in US national security.

• Industry Must Be Part of the Solution

The Study Group recommends that industry and government enter into a meaningful and ongoing dialogue on how to make existing and reformed controls, both national and multilateral, truly effective. To establish a more effective, two-way consultative relationship, the Study Group recommends that the president create a senior-level Industry Advisory Group (IAG) that would provide advice and input to the Deputies Committee on an ongoing basis. The IAG could provide valuable insights regarding the broader impact of specific policies and processes on US industry and US economic competitiveness.

The time for action is now. A convergence of interests - between both political parties, government and industry, and the United States and its key allies and friends - has created a new, and perhaps fleeting, opportunity for US leadership and presidential action. The Study Group believes that the strategy outlined herein for a new, more effective multilateral export control framework would enhance US national security. The Study Group urges immediate steps to advance its implementation."