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The United States maintains comprehensive economic embargoes against Cuba, Iran, Iraq, Libya and Sudan (five of the seven countries designated by the Secretary of State as state sponsors of international terrorism). The controls maintained on Cuba, Libya, Sudan and Iran are discussed in detail in Chapter 4.
The United States also maintains arms embargoes on Iran, Iraq, Sudan, the Taliban, Liberia, Rwanda, Somalia, the Federal Republic of Yugoslavia, and an embargo on arms and other specific commodities on UNITA (in Angola).
Federal Republic of Yugoslavia (Serbia and Montenegro)
On October 12, 2000, in the wake of Vojislav Kostunica's victory in the Serbian elections, President Clinton announced his intention to lift all economic sanctions against the Federal Republic of Yugoslavia. The Executive Order that will lift the sanctions will impose restrictions against dealings with Slobodan Milosevic, his family and close associates and those indicted for war crimes.
India/Pakistan
In accordance with Section 102(b) of the Arms Export Control Act (the "Glenn Amendment"), President Clinton reported to the Congress on May 13, 1998 (in regard to India), and on May 30, 1998 (in regard to Pakistan), his determinations that those non-nuclear weapon states had each detonated a nuclear explosive device. The President directed that the relevant agencies and instrumentalities of the United States take the necessary actions to impose the sanctions described in Section 102 (b)(2) of that Act.
On June 18, 1998, the United States announced certain sanctions on India and Pakistan, as well as supplementary measures to enhance the sanctions. On November 19, 1998, the United States amended the Export Administration Regulations (EAR) to codify the June announcement. Consistent with Section 102 (b)(2) of the Arms Export Control Act, the United States added Part 742.16 to the EAR, codifying a license review policy of denial for the export and reexport of items controlled for nuclear proliferation (NP) and missile technology (MT) reasons to all end users in India and Pakistan. The Commerce Department implemented the policy in May 1998.
To supplement the sanctions of Part 742.16, the United States added certain Indian and Pakistani government, parastatal and private entities determined to be involved in nuclear, missile or conventional weapons activities to the Entity List in Supplement No. 4 to Part 744 of the EAR. License requirements for these entities are set forth in Parts 744.11 and 744.12. Exports and reexports of all items subject to the EAR require a license to listed government, parastatal and private entities. Exports and reexports of all items subject to the EAR having a classification other than EAR99 require a license to listed military entities. The United States will review license applications for the export or reexport of the restricted items to listed entities with a presumption of denial, with limited exceptions.
The President signed into law the Defense Appropriations Act of 2000 on October 25, 1999. Title IX of the Act addresses the economic sanctions imposed by the United States on India and Pakistan following the detonation of nuclear devices by these countries in May 1998. The Act states that the broad application of export controls to nearly 300 Indian and Pakistani sanctioned entities is inconsistent with specific national security interests of the United States and that the list requires refinement. Further, the Act states that it is the sense of Congress that "export controls should be applied only to those Indian and Pakistani entities that make direct and material contributions to weapons of mass destruction and missile programs and only to those items that can contribute to such programs." The Act mandates that the President report to Congress within 60 days on the list of sanctioned entities.
Pursuant to the Act, the Administration initiated a review of the list of sanctioned Indian and Pakistani entities with the aim of refining the list and targeting the items controlled. On March 17, 2000, the Commerce Department published a regulation in the Federal Register that removed 51 entities from the list and changed the licensing policy for EAR99 items exported to listed Indian and Pakistani entities from a presumption of denial to a presumption of approval.
On July 26, 2000, the Commerce Department published another regulation in the Federal Register that removed two more Indian entities and added one entity.
On October 28, 2000, the President signed into law the "Trade Sanctions Reform and Export Enhancement Act of 2000," Title IX of the 2000 Agriculture Appropriations Act. Agencies have 120 days to implement certain provisions of the Act that require the President to terminate any unilateral agricultural or medical sanctions in effect on the date of the enactment of the Act, except that certain controls must apply to agricultural and medical exports to designated terrorist supporting countries. Accordingly, the Department of Commerce is currently preparing regulations that permit commercial exports of agricultural and medical items to certain sanctioned entities in most countries, while implementing the licensing regime specified in section 906 of Title IX for the following countries: Cuba, Libya and the FRY (countries for which it exercises export license responsibility.)
The Department of Commerce has export control authority for dual-use items subject to its jurisdiction to all countries, including countries subject to comprehensive trade embargoes administered by the Treasury Department's Office of Foreign Assets Control (OFAC). The Commerce and Treasury Departments often consult and exchange information on specific issues and cases within their concurrent export control authority. Duplicate licensing requirements are generally avoided by allocating most export licensing responsibilities for specific countries to one agency. For example, for cases in which the Commerce Department has licensing responsibility, it will note potential applicability of Treasury restrictions on U.S. person activities. In cases in which the Treasury Department has export licensing responsibility, the Treasury Department will, on occasion, request commodity classifications and other technical advice from the Department of Commerce.
In instances in which two licenses are required (e.g., exports/reexports to Sudan, areas of Afghanistan controlled by the Taliban, UNITA in Angola), the Commerce Department encourages applicants to first seek Treasury Department authorization since the U.S. policy is one of denial for embargoed items.
The licensing agency responsibilities for items subject to the EAR can be summarized as follows:
Federal Republic of Yugoslavia
The Department of Treasury has created general licenses authorizing incidental transactions related to Department of Commerce authorized exports or reexports to the Federal Republic of Yugoslavia (FRY). In most instances, only a Commerce Department license is needed for exports to the FRY. However, a Treasury Department license may be required for certain export-related transactions with the FRY, such as transactions involving financing by a blocked entity.
India/Pakistan
The Department of Commerce maintains licensing authority for the export and reexport of items subject to the EAR, including non-sensitive commodities, to nearly 150 Indian government, parastatal and private entities determined to be involved in nuclear, missile or conventional weapons activities.
Arms embargoes against the Federal Republic of Yugoslavia (FRY), Rwanda, Liberia and Somalia
The Department of Commerce and the Department of State are responsible for implementing the embargo on arms, arms-related items and certain other commodities under their respective export control jurisdiction.
The United States maintains an embargo on the FRY pursuant to United Nations Security Council (UNSC) resolution 1160 of March 3, 1998, which directed member countries to impose an embargo on the sale of arms and related materials to the FRY. In keeping with UNSC Resolution 1160, the Department of Commerce published a final rule on July 14, 1998, implementing the embargo on arms and arms-related items to the FRY. This embargo remains in effect for these items, including those controlled under the EAR for crime control and regional stability reasons.
The UNSC imposed an arms embargo on Rwanda on May 17, 1994. In 1995 the Security Council suspended the application of the embargo to the Government of Rwanda through specified points of entry and later terminated (effective September 1, 1996) the application of restrictions on sales or supplies to the government of Rwanda. The sale or supply of such arms and related materiel to non-governmental forces for use in Rwanda remains prohibited.
The United States maintains an embargo, administered by the Department of Commerce and the Department of State, under the United Nations Participation Act and other authorities, on the sale or supply to Rwanda by U.S. persons or from the United States (including the use of U.S.- registered vessels or aircraft) of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary police equipment and spare parts for the aforementioned, regardless of origin. (See 15 CFR 746.8 and 22 CFR 126.1(c).)
In 1992 the United Nations imposed an embargo "on all deliveries of weapons and military equipment" to Liberia. The Department of State implements this embargo under the authority of the Arms Export Control Act. (See Department of State regulations, 22 CFR 126.1(c).) Also during 1992, the United Nations Security Council imposed an embargo on all deliveries of weapons and military equipment to Somalia. The Department of State implements this embargo under the Arms Export Control Act. (See Department of State regulations, 22 CFR 126.1(c).) These arms embargoes are not further discussed in this report.
License Requirements and Licensing Policy for the Federal Republic of Yugoslavia (FRY)
A. A new executive order, to be issued in early 2001, will lift trade and financial sanctions against the FRY. When the executive order is issued, the licensing requirements and policy will be as follows:
B. An exception to this licensing policy includes a policy of denial for all exports and reexports of items subject to the EAR by U.S. persons to Slobodan Milosevic, his family, his close associates and indicted war criminals.
C. All license exceptions that were available to the FRY on April 1, 1999, are restored.
D. The U.N.-mandated arms embargo implemented by the United States on the FRY will remain in effect.
Licensing Policy for India/Pakistan
A. On November 19, 1998, the Federal Register published a rule that amended the Export Administration Regulations (EAR) to implement the Administration's sanctions on India and Pakistan. The rule codified those sanctions that included a licensing policy of denial for exports and reexports of items controlled for nuclear nonproliferation and missile technology reasons to India and Pakistan, with limited exceptions. Additionally, the rule added certain Indian and Pakistani government, parastatal and private entities to the Entity List set forth in the EAR.
On March 17, 2000, the Federal Register published a rule that removed 51 Indian entities and modified one entity's listing. In addition, this rule revised the license review policy for items classified as EAR99 to Indian and Pakistani government, private and parastatal entities from a presumption of denial to a presumption of approval. (The entity list can be found in Supplement 4 of Part 744, which includes Appendix A and Appendix B.)
B. Certain government, parastatal and private entities in India and Pakistan determined to be involved in nuclear or missile activities are ineligible to receive exports or reexports of items subject to the EAR without a license. Exports and reexports of all items subject to the EAR to listed government, parastatal and private entities require a license. A license is also required for any item subject to the EAR that the exporter knows or has reason to know will be used in a weapons proliferation activity.
No License Exceptions are available to these entities, except those applicable to items listed in §740.2(a)(5) of the EAR, which remain available to such entities when intended to ensure the safety of civil aviation and safe operation of commercial passenger aircraft.
With respect to subordinates of listed entities in India and Pakistan, only those specifically listed in Supplement No. 4 to part 744, Entity List, are subject to the restrictions and policies set forth in this section.
C. License review standards for government entities determined to be involved in nuclear or missile activities:
D. License review standards for parastatal and private entities determined to be involved in nuclear or missile activities:
E. Certain military entities in India and Pakistan are ineligible to receive exports or reexports of any item subject to the EAR having a classification other than EAR99 without a license. No License Exceptions are available for exports to these entities, except those applicable to items listed in §740.2(a)(5) of the EAR, which remain available to such entities when intended to ensure the safety of civil aviation and safe operation of commercial passenger aircraft.
License review standards for military entities:
Applications to export or reexport items controlled for NP or MT reasons to listed military entities will be denied, except items intended to ensure the safety of civil aviation and safe operation of commercial passenger aircraft, which will be reviewed on a case-by-case basis. Computers will be reviewed with a presumption of denial.
All other license applications will be reviewed with a presumption of denial.
Licensing Policy for Rwanda
A. The United States requires a license for foreign policy purposes for export to Rwanda of all arms and related materiel of all types, regardless of origin, including weapons and ammunition, military vehicles and equipment, paramilitary police equipment and spare parts for these items. This requirement applies to the export by any person from U.S. territory or by any U.S. person in any foreign country or other location to Rwanda. The United States also requires a license for the use of any U.S. aircraft or vessel to supply or transport any such items to Rwanda.
B. The United States generally denies applications for export or reexport to Rwanda of crime control and detection commodities.
The United States generally denies applications for export or reexport to Rwanda of any item with an Export Control Classification Number (ECCN) ending in "18."(1)
The United States generally denies the export of other listed items.(2)
The United States imposed embargoes and sanctions on each of these countries and entities for foreign policy purposes. These embargoes and sanctions demonstrate the determination of the United States to refrain from normal trade with these countries and entities until they take steps to conform to recognized international standards.
Federal Republic of Yugoslavia
The removal of export controls on most goods in the wake of the Kostunica presidential victory is consistent with U.S. foreign policy goals and objectives in the region, which includes the support of democratization efforts in the FRY. The retention of controls on Slobodan Milosevic and his close associates is aimed at assuring that Milosevic and his associates will not be given the financial means to restore themselves to power or positions of influence.
India/Pakistan
The United States imposed sanctions on India and Pakistan to send a strong message of concern regarding their respective nuclear proliferation activities with the objective of preventing the spread of nuclear weapons and ballistic missiles and decreasing tensions in South Asia.
Rwanda
The controls on arms-related items remain in place to prevent any U.S. contribution to potential conflict in that country and to conform to United Nations-mandated sanctions.
The embargoes and sanctions have denied these nations the substantial benefits of normal trade relations with the United States. The controls continue to put pressure on the governments of these countries to modify their policies since the United States will not lift these embargoes and sanctions without a general improvement in relations.
Federal Republic of Yugoslavia
Removal of economic sanctions recognizes the FRY's democratic transition as a result of the September 2000 elections. The sanctions maintained on Milosevic and his immediate family, close associates and indicted war criminals are intended to restrict the ability of that group to transfer assets looted from the national patrimony out of Serbia.
India/Pakistan
The Secretary has determined that the sanctions have succeeded in expressing U.S. concern for the nuclear tests in these countries.
Rwanda
The applicable controls may serve to reduce the potential for conflict.
The controls complement U.S. foreign policy in other aspects of U.S. relations with these countries. They encourage the governments to modify their policies with the goal of improving relations with the United States.
Federal Republic of Yugoslavia
The United States strongly opposed the Milosevic regime's human rights abuses in Kosovo. The embargo demonstrated that opposition. The removal of comprehensive economic sanctions on the FRY is consistent with the U.S. foreign policy objective of promoting democracy in that country and ensuring stability in the Balkans.
India/ Pakistan
The sanctions are consistent with the U.S. foreign policy objective to halt the proliferation of nuclear weapons and other weapons of mass destruction and their delivery systems.
Rwanda
These controls are consistent with U.S. foreign policy goals of promoting peace and stability and preventing human rights abuses.
Federal Republic of Yugoslavia
EU nations, other European states in central and eastern Europe, Japan, Korea, and Australia were among the nations that joined the United States in imposing trade and financial sanctions on Serbia as a result of its actions against the Kosovar population. The European Union removed trade and financial sanctions on November 15, 2000, while maintaining certain restrictions against individuals closely identified with the Milosevic regime. The United States intends to lift its sanctions by early 2001.
India/Pakistan
Although other countries have expressed some support for U.S. sanctions against India and Pakistan, no other country has imposed similar dual-use export controls. The Secretary of Commerce has determined that the reaction of other countries to the extension of controls will not render the controls counterproductive to overall U.S. policy.
Rwanda
The U.S. arms embargo of Rwanda is consistent with the objectives of the United Nations; the United States has received no significant objections to these controls.
Federal Republic of Yugoslavia
Following the imposition of comprehensive economic sanctions on Serbia in April 1999, U.S. exports to Serbia dropped precipitously. In 1998 U.S. exports to Yugoslavia totaled
$73 million, and the top export categories were aircraft/aircraft parts, nuclear reactors/machinery, and electrical machinery. In 1999, this figure dropped to $58 million, with electrical machinery, vehicles, and animal fats making up the top export categories. From January to September of 2000, total U.S. exports were only $22 million, and the top export categories were wheat, milling industry products, electrical machinery and vegetables. In FY 2000, the United States approved 35 licenses for humanitarian exports to Serbia for a total value of $21 million. 29 licenses were denied for Serbia with a total value of $2.4 million. Denials represented items prohibited to Serbia under the embargo.
India/Pakistan
India: U.S. exports to India in 1999 totaled $3.4 billion, roughly equal to the $3.5 billion in exports in 1998. Based on data for the first nine months of this year, total exports to India in 2000 are expected to stay the same as the previous two years. The table below presents the top U.S. exports to India for 1999 and for January to September of 2000.
HTS |
Description |
1999 |
2000 |
|---|---|---|---|
84 |
Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof |
$719.5 |
$704.0 |
31 |
Fertilizers |
469.8 |
66.1 |
88 |
Aircraft, spacecraft, and parts thereof |
375.4 |
233.3 |
85 |
Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television recorders and reproducers, parts and accessories |
327.2 |
334.3 |
29 |
Organic chemicals |
229.7 |
172.0 |
90 |
Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof |
213.0 |
164.2 |
87 |
Vehicles, other than railway or tramway rolling stock and parts and accessories thereof |
142.8 |
15.7 |
98 |
Special classification provisions, nesoi |
95.8 |
72.9 |
39 |
Plastics and articles thereof |
82.2 |
51.5 |
47 |
Pulp of wood or other fibrous cellulosic material; recovered (waste and scrap) paper and paperboard |
70.8 |
39.3 |
In FY 2000, the United States approved 751 licenses for exports to India valued at $164 million and denied 244 license applications valued at $23 million. In the calendar year 2000, the denial rate for licenses (including returned applications) fell to 34 percent from a 63.7 percent denial rate for 1999. This improvement in license denials is largely due to the March 2000 policy change that removed 51 Indian entities from the Entity List and revised the license review policy for items classified as EAR99 (items that are subject to the EAR but are not listed on the Commerce Control List) to Indian and Pakistani government, private and parastatal entities from a presumption of denial to a presumption of approval.
Pakistan: Although the United States is the leading source of Pakistan's imports, overall trade with Pakistan has always been limited. U.S. exports to Pakistan in 1999 totaled $416 million, down significantly from a total of $726 million in 1998. In 1999, the leading U.S. exports to Pakistan were machinery, fertilizers, wheat and organic chemicals.
Export licensing statistics from the last two fiscal years indicate that the impact of the new foreign policy-based export controls on licensed U.S. trade with Pakistan has been limited. In FY 1999, the Department of Commerce approved 21 license applications valued at $1.6 million for Pakistan, denied 19 applications valued at $1.9 million, and returned without action 23 applications valued at $1.8 million. For FY 2000, the Department of Commerce approved 16 applications valued at $2.6 million and rejected 11 applications valued at $6.9 million.
Rwanda
The arms embargo has had very little impact on U.S. industry since its inception.
Controls on exports to embargoed and sanctioned countries -- covering virtually all U.S.-origin goods, including consumer items that would not ordinarily attract enforcement attention -- raise a number of challenges. These include the need to concentrate limited resources on priority areas, developing new strategies to limit reexport violations, strengthening the cooperative relationship with other law enforcement agencies in the United States and overseas and maintaining a consistent outreach effort to help limit U.S. business vulnerability. Overall, the embargoes are generally understood and supported by the U.S. public; we can count on voluntary cooperation from most U.S. exporters.
Federal Republic of Yugoslavia
The names of persons that trigger the license requirement (namely, Slobodan Milosevic, his family and close associates, and indicted war criminals) will be on a published list, and all items subject to the EAR will continue to require a license for these persons. Thus, information needed to enforce the controls can be disseminated quickly to enforcement personnel without the need for extensive training. Additionally, such a requirement can be easily understood so we can expect significant voluntary cooperation. The most difficult enforcement challenge is likely to be distinguishing unlicensed reexports by U.S. persons (which will be illegal) from unlicensed reexports by non-U.S. persons (which will be legal). While this may be difficult, enforcement personnel are trained and experienced in gathering evidence, and we do not expect it to be an insurmountable problem.
India/Pakistan
Enforcement of the new U.S. export controls relating to India and Pakistan do not present any new enforcement problems. U.S. export controls directed at India and Pakistan have received widespread domestic and international press reporting, and the U.S. Government has had many discussions with industry on its concerns with India and Pakistan's nuclear and missile development programs. Commerce has published a list containing India and Pakistan entities of concern to help guide exporters in their efforts to comply with the U.S. export controls.
For the last four years, the Department of Commerce's export enforcement arm has sent special Safeguards Verification Teams to India to conduct on-site end-use checks there. The Department of Commerce conducts similar visits to Pakistan. In August 2000, Export Enforcement was part of an interagency team that visited India to asses that country's export control policies.
The U.S. Government continues to remain concerned about the inability to conduct end-use checks on government facilities in India. Licensing or otherwise authorizing for export U.S. commodities or technologies to end-users or end-uses which the U.S. government cannot verify is an enforcement concern. This is particularly important because India is classified as a Tier 3 country in terms of export of high-performance computers (as identified in the EAR), and Congress has required that a post-shipment verification be conducted on every high performance computer (HPC) export. Not only does this requirement pose a substantial resource problem, it also means added scrutiny of license applications to ensure that HPCs are not sent to organizations where the Department of Commerce cannot conduct post shipment checks.
Rwanda
U.S. trade with Rwanda was minimal, and the Department of Commerce does not anticipate significant problems maintaining U.S. export controls on Rwanda.
C. Consultation with Industry
The Department of Commerce published a notice in the Federal Register on November 6, 2000, requesting public comments on its foreign policy-based export controls. A notice was also published on the BXA web page. A more detailed review of the comments received is available in Appendix I.
Federal Republic of Yugoslavia
Given the nature of the human rights violations in Kosovo by the Serbian authorities, the support of U.S. allies for the sanctions and the NATO operations in Serbia and Kosovo, U.S. industry did not object to the May 1999 sanctions. The conflict all but eliminated the market for many classes of goods. The exemptions for Montenegro and Kosovo helped reduce industry's objections to the control because they have been able to find alternative end-users for goods originally destined for end-use in Serbia. Initial response to the announcement of the lifting of sanctions has been overwhelmingly positive, as many U.S. companies are poised to regain previous market share or to take advantage of new requirements identified in the wake of the war.
The Department of Commerce published a notice in the Federal Register on July 27, 2000, requesting public comment on the change in license exception AVS affecting temporary sojourns to Serbia. To date, there has been no response to the request in regard to license exception AVS. In addition, no comments were received specific to the FRY during the November 2000 Federal Register comment period.
India/Pakistan
Anter Corporation, a manufacturer of scientific equipment, submitted comments to the Department of Commerce on the burden the India sanctions placed on its business operations. Specifically, Anter asked that license requirements be waived for EAR99 products to all end-users in India. The company stated that losses due to the India sanctions amounted to 25 percent of the company's annual sales and, as a result, has directly impacted its ability to retain skilled employees.
Rwanda
U.S. exports to Rwanda were minimal, and entities with which to trade there limited.
Federal Republic of Yugoslavia
The United States announced its intention to lift most economic sanctions on the FRY on
October 12, 2000. This policy change was closely coordinated with our European allies. Remaining financial restrictions on a small number people allied with Milosevic and war criminals are also coordinated with the European Union and should not affect bilateral trade.
India/Pakistan
The United States is in regular consultation with other countries to urge cooperation with our enforcement of U.S. sanctions on India and Pakistan and to keep those countries informed on the ongoing talks with the governments of India and Pakistan.
Rwanda
Most countries support U.S. and international efforts to stabilize Rwanda and to prevent further ethnic conflict.
The United States imposes embargoes and sanctions in an effort to make the strongest possible statement against a particular country's policies. Restrictions on exports can supplement other actions that the United States takes to change the behavior of the target countries, including severing diplomatic relations, banning imports into the United States, seeking United Nations denunciations and curtailing or discouraging bilateral educational, scientific or cultural exchanges. U.S. controls complement diplomatic measures and continue to be used to influence the behavior of these countries.
The foreign availability of items controlled under Section 6(a) has been considered by the Department of Commerce. In general, numerous foreign sources of commodities similar to those subject to these controls are known, especially for items controlled by the United States.
Even though sanctions are being lifted on the FRY in the wake of the Kostunica presidential victory there, the United States and its allies will continue to deny goods, technology and software to Milosevic and his supporters. It is not likely that foreign availability will play a major part in circumventing these targeted sanctions, since the United States and European partners are closely coordinating their export policies with respect to indicted war criminals.
Many of the commodities and related software and technology affected by the sanctions on India and Pakistan are subject to multilateral controls for national security, missile technology or nuclear nonproliferation reasons. A considerable number of items that are controlled by Commerce but are not subject to multilateral export controls are available from numerous foreign sources.
END NOTES
1. Items on the Commerce Control List with Export Control Classification Numbers (ECCNs) ending in "18" are those items on the International Munitions List that the Department of State previously controlled on the U.S. Munitions List, but now fall under the licensing jurisdiction of the Department of Commerce.
2. Section 746.8(b)(1)(ii) of the Export Administration Regulations lists these items as those items described by any ECCN ending in "018", and items described by ECCNs 0A978; 0A979; 0A982; 0A983, 0A984; 0A986; 0A988; 0B986; 0E982; 1A005; 1A984, 5A980; 6A002.a.1, a.2, a.3, and .c; 6A003.b.3 and b.4; 6E001; 6E002; and 9A991.a.