Where Industry and Security Intersect
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Export controls have been a tool of American foreign policy for over fifty years, but the diffusion of technology and the global nature of the international economy now force us to think about them in new and creative ways. Four broad themes describe those changes:
-- The international security threat has changed from a global conflict between broad alliances equipped with the most advanced weaponry to a series of regional problems.
-- Military strength is more and more dependent on technologies developed by and built for the commercial sector, particularly information and communications technologies.
-- Information, financing, R&D and production are broadly diffused and liquid. No one nation can remain at the leading edge of technology unless it participates in this global market, which, by definition, means exporting and importing.
-- The multilateral basis of national export controls is no longer a single, cohesive, organization of allies but instead a series of regimes whose goals are to reduce the proliferation of weapons of mass destruction rather than to preserve Western military superiority through technology denial.
During the Cold War our security depended on the advantage provided by our sometimes slim margin of technological superiority. Export controls, by denying our opponent ready access to the most advanced technology, helped preserve this advantage.
This is not the situation today. Instead, the West faces a series of disjointed threats to its interests in several important regions. These threats do not arise from militaries capable of challenging our own or from nations capable of matching Western weaponry.
Second, in meeting these threats, the U.S. has found itself repeatedly assembling and heading ad hoc coalitions put together to meet a particular challenge. In many instances the participants in these coalitions have been drawn from the same group of leading nations, but we have discovered that the congruence of national policies in one area does not translate into congruence in all areas. In trade-related matters like export controls, when a common security rationale is weak, economic interests carry more weight. Nations weigh the benefits to their national interest, and we should not be surprised to find that where the threat to security is judged low, nations place economic interests first, with the result that multilateral export controls today are marked by a strong tendency to seek trade advantage.
Third, military power is growing more and more reliant on technologies from the civil sector. In particular, microprocessor based technologies developed for and spread widely through the civilian economy play an increasing role in military effectiveness. Their widespread commercial use around the world profoundly limits our ability to deny access to them by any interested party. This suggests that export controls are less likely to prevent access to many technologies, and that the long-term effect of inappropriate export controls may be to damage our own security more than that of our targets.
Globalization, in this context, means that more efficient modes of transportation and communication, the internationalization of capital flows, and the development of the information-based economy are transforming national economic systems into a global economy where capital, ideas, goods, technology flow across borders.
The United States cannot claim unique capabilities when compared to the European Union, Japan, Canada, or some of the larger emerging economies. To succeed in this market requires companies --and nations --to develop fluid structures capable of transferring resources to regions where market advantage is greatest. Failure to adapt has meant economic decline.
The ability of any one nation to prevent the technology transfers that accompany such flows is limited. The power of the global market is such that if one source chooses to deny an export, absent a broad consensus among our partners, some other source will meet the demand. The ability to produce sophisticated arms --fighters, missiles, submarines --is not as widely diffused, but arms makers are responding to the same global forces that have led to the diffusion of civil technologies.
As a result, our export control philosophy is based on the realization that the commercialization of formerly military technology, and the increasing reliance of militaries on commercially-developed technology means that a majority of militarily useful technology is or will be available commercially outside the U.S. This is particularly true of information and communications technology and services, including space-related technologies, which form the technological core of the ongoing revolution in military affairs. Because of this change our ability to control technology will decrease dramatically.
High performance computers best illustrate this situation. The issue is not their ability to contribute to military production --all the weapons in the U.S. arsenal today, including our nuclear weapons, were built using computers with speeds slower than the speed of a good PC sold in the millions today. Computers are not a choke point for military or WMD production. The real issue is the increasing reliance of our defense establishment on computer networks and processes that allow them to operate more effectively. The 21st century fighting force will be more reliant on computers than any before it, and whoever has an edge in this technology will have an edge on the battlefield.
However, the ubiquity of computer technologies and the ease of their transfer makes export controls much more difficult than ten or even five years ago. Personal computers are everywhere --hundreds of thousands are assembled in the U.S. and even more around the world. Microprocessors, which are their key ingredient, have become a commodity product widely available throughout the world from numerous sources. Intel, for example, produces eight to ten million computer chips a month, which it then provides to its 50,000 authorized dealers worldwide. Its new chip, the Itanium, will operate at a level 23 times greater than what the U.S. controlled as a "supercomputer" in 1993.
We cannot realistically expect to keep the organizations responsible for weapons development in states of concern, organizations that are technically sophisticated, well funded and which enjoy strong government support, from clandestinely, or even openly obtaining high performance computers whenever they choose.
Computers are but one example of the military's transition to greater dependence on Commercial-Off-The-Shelf (COTS) products, which, in turn, means that the technology driver in advanced economies is increasingly in the civilian sector, not the military. That means these products are, by definition, more widely available, but it also means that military strength is directly tied to the health of the civilian companies that produce these products. The U.S. Department of Defense relies on a strong high tech sector to develop and manufacture new and better products; yet it does not buy enough by itself to keep them healthy. Instead, exports have become the key to growth and good health. Failure to export means fewer profits for research and development of next generation technologies, which means, in turn, that a strong defense requires strong, high-tech exporters, and the willingness of governments to support exports. That, obviously, requires a fresh look at the way we administer export controls.
Despite these developments, the basis for effective export controls remains multilateral cooperation. The four multilateral regimes that form the basis for our export controls all have common elements: a statement of principles and objectives which guides members in their export decisions; lists of controlled technologies; consensus as the basis for decision making and a reliance on national discretion in implementation.
This Administration has made significant strides in reinforcing existing regimes and in building new ones. We have been criticized for these efforts by some in the nonproliferation community who fail to understand that consensus and persuasion determine the bounds of what can be done with export controls. Where consensus is high and arguments persuasive, the regimes have had good effect. This is most true for those dealing with the proliferation of weapons of mass destruction. Even there, however, we have seen that determined nations can still succeed in acquiring WMD technologies. Economic globalization is inevitably weakening controls based on technology denial. Even so, one of the best ways to strengthen export controls is to expand consensus in the regimes. This works best as part of a larger nonproliferation strategy that addresses the demand side of the proliferation equation --the reasons nations seek weapons of mass destruction --as well as the supply side where export controls have some effect.
The Wassenaar Arrangement is the regime where there is less consensus on what needs to be controlled and to whom it needs to be denied. Wassenaar is sometimes called COCOM's successor, and it is often compared unfavorably to COCOM, at least in the United States. Yet the critics neglect to mention that it does not differ greatly from the other regimes. Like them, it has a statement of principles and objectives; lists of controlled technologies; consensus as the basis for decision making and a reliance on national discretion in implementation.
Wassenaar's control list was inherited from COCOM and most nations believe that large portions of it are out of date. Beyond that, the stated objective of Wassenaar is to prevent destabilizing buildups of conventional arms and related dual use technologies. There is agreement in the regime that four countries --Iran, Iraq, Libya and North Korea --require particular scrutiny. But this consensus does not extend to countries like India, Pakistan, and China, which, while certainly not adversaries, are pursuing proliferation policies that are of serious concern. The fact that they are also significant markets no doubt contributes to the lack of consensus on how to deal with them.
So, what do we do now? Export controls will remain an important tool of U.S. foreign policy. However, from a purely national security standpoint, their utility will diminish as the list of controllable technologies inevitably shrinks. This Administration is not in favor of eliminating export controls, but rather on focusing them on what matters. There will always be a number so instrumental to the maintenance of our military advantage as to merit continued control. However, areas such as machine tools and semiconductor manufacturing equipment, for example, where there is world wide availability, and many space technologies, where the U.S. has led globally but is under growing pressure from competent competitors, are where our ability to control is rapidly eroding.
The other new problem area --likely to be left to the next Administration to address --is the transfer of know-how, of technology that is embodied in people's minds or other less tangible forms than blueprints and specifications. As manufacturing becomes more and more fungible across the globe, the critical determinant of technology leadership will become control of information. Exercising such controls essentially means efforts to tell scientists and other smart people where they can go and what they can say and do when they get there. Doing that in a manner consistent with U.S. law and the Constitution, however, poses serious challenges that we have not yet begun to think our way through.
We have established what we call our "deemed export" program, which requires export licenses for companies wishing to hire foreign nationals to work on technologies that are controlled to their countries of origin. Because they might return to their countries with the information they obtained through their employment, we "deem" that an export that requires a license. This has been, as one might imagine, a difficult program to implement, but it addresses only a small part of the problem. Our successors will have to wrestle with all the implications of this issue.
How can the U.S. lead the international community in building better export controls and in ensuring that its own controls contribute to real national security needs?
First, the U.S. needs to recognize that much of the debate here in the United States over export controls is out of sync with the rest of the industrialized world. This reflects differences over security policies, threat perceptions and the modalities of transatlantic cooperation, but it forms a crucial backdrop to improving multilateral controls.
Second, we need to continue to consult with our allies and other regime members on expanding cooperation in improving controls. For conventional arms and related dual-use equipment, it may be less than we would wish. In particular, we must bear in mind that others will not adopt our sanctions policies. Related to that, we should continue our efforts to promote adoption of "catch-all" controls by our regime partners in order to ensure that adequate authority exists for controlling a wide range of technology to specific end users of concern.
Third, in the context of Wassenaar, we need to focus the list of controlled items onto those that are truly controllable and critical to advanced military capabilities. Both the Wassenaar Arrangement and our own national export controls need to be adjusted, and this adjustment would put us in a better position to seek coordination of our national licensing decisions.
Fourth, the U.S. needs to give up the ghost of COCOM. COCOM was a valuable tool for NATO in the Cold War, but it is gone and cannot be resurrected.
Fifth, we need to continue our efforts to bring China into the multilateral regimes. To do this, China will need to continue to make progress in adhering to the international norms for nonproliferation and arms sales, but all regimes would benefit if this growing industrial power was a member.
We must continue our efforts to encourage non-members to adhere to regime standards. The Department of Commerce, working closely with the State Department, has worked with the countries of the former Soviet Union and Warsaw Pact to develop comprehensive and effective export control systems. We have often found that even in cases where these governments are willing to take hard steps to keep items out of the hands of unreliable parties, they do not have the practical means or legal basis to do so. We have had some success encouraging them to take all the necessary steps, including adopting the control lists of the multilateral regimes, to allow them to adhere to the objectives of the regimes, but more needs to be done.
Finally, the U.S. needs to work towards a consensus, or as close as we can get to consensus, in our own national discussions over export controls. The ongoing debate in Congress on export controls revealed deep differences, and I fear that these differences, if not resolved, could end up compromising U.S. efforts to exert leadership in this area.
By acknowledging what we cannot control and by acknowledging the benefits of trade, we will only strengthen our security. It does no good to try to hold back the tide. Instead, we must develop strategies --including export control strategies --that will harness these flows and make them work for a stronger and safer world in the coming century.
In April of 2002 the Bureau of Export Administration (BXA)
changed its name to the Bureau of Industry and Security(BIS). For historical
purposes we have not changed the references to BXA in the legacy documents
found in the Archived Press and Public Information.