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The Office of Nonproliferation Controls and Treaty Compliance (NPTC) administers U.S. multilateral and unilateral export controls on nuclear and missile technology, and chemical and biological items controlled for nonproliferation reasons; ensures compliance with U.S. obligations under the Chemical Weapons Convention (CWC) and Biological Weapons Convention (BWC); controls the export of materials in short supply; and administers requirements related to technology transfers to foreign nationals in the United States. The United States is a member of the Nuclear Suppliers Group (NSG), the Missile Technology Control Regime (MTCR), and the Australia Group (AG), international groups whose focus is to prevent the spread of weapons of mass destruction and their delivery systems. NPTC represents the Department in international negotiations on the export controls that are shared by member-nations of the NSG, MTCR, and AG, and represents the Department on U.S. delegations to the administrative and policy meetings of the CWC, and the negotiating sessions on issues related to the establishment of an administrative and policy framework for the BWC. NPTC is also responsible for all policy actions, export licenses, commodity classifications, and advisory opinions pertaining to items subject to nuclear, missile technology, chemical and biological, and short supply controls, as well as the control of technology transfers to foreign nationals known as "deemed exports."
Following the 1974 explosion of a nuclear device by India, the United States proposed the formation of the NSG, and initially approached six other major supplier states -- Canada, Germany, France, Japan, the United Kingdom, and the Soviet Union -- to create an informal group of nations concerned with the proliferation of nuclear weapons. The NSG was formally constituted in 1992; its membership now totals 39 member-countries.
Two documents guide NSG members in establishing national controls: the Guidelines and the Annex. The NSG Guidelines establish the underlying precepts of the regime, and provide a degree of order and predictability among suppliers, ensuring harmonized standards and interpretations of NSG controls. The Guidelines also call for consultations among members on sensitive cases to ensure that transfers do not contribute to risks of conflict and instability.
The Annex contains the actual list of 70 categories of dual use items subject to NSG controls. The Annex also contains a General Technology Note, which ensures that exports of technology directly associated with listed items will be subject to the same degree of scrutiny and control as the items themselves. NSG members are required to establish national licensing procedures for the transfer of Annex items. Overall responsibility for NSG activities lies with the member states; the NSG proceeds on consensus basis.
Since the early 1990's, formal annual plenary meetings have been held to provide the opportunity for multilateral consultations. The Plenary also provides the opportunity for members to review the Annex and the Guidelines to ensure that NSG controls are focused on truly sensitive nuclear technology, and that they provide the means to meet evolving nuclear proliferation challenges.
The NSG held its annual Plenary session in Paris, France on June 19-24. Three new countries were welcomed as NSG members: Belarus, Turkey, and Cyprus. It was proposed that the administrative structure of the NSG be streamlined, easing the application process for future new members. A working group was established to look at possible options for simplifying the NSG's institutional arrangement.
With the support of the United States, NSG decided that no further action was needed to control parts and components, although individual recommendations for the control of spare parts could be taken up during normal list review activities. It was the consensus of NSG members that the "catch all" controls of most member countries are sufficient to control the parts and components of controlled items.
The final action of the NSG at the Paris Plenary was to agree that the United States will host the 2001 Plenary in Aspen, Colorado, the week of May 7, 2001, when the United States will take over the chairmanship of the NSG.
As in prior years, BXA continues to issue license denials for NSG dual use controlled items as part of the "no undercut" policy. Under this policy, a denial notification received from an NSG member country precludes other member countries from approving similar transactions, thereby assuring that the earlier denial is not undercut. There are procedures for member countries to consult on specific denials if they wish to disagree with the original denial decision. BXA has continued its active role in reporting "catch all" denials for uncontrolled items destined to end users of proliferation concern.
On April 16, 1987, the United States and its G-7 trading partners created the Missile Technology Control Regime (MTCR), whose focus is to limit the proliferation of missiles capable of delivering weapons of mass destruction. The MTCR is not a treaty-based regime, but rather an informal group of 32 countries that have agreed to coordinate their national export controls to help prevent missile proliferation.
The MTCR Guidelines and the Equipment and Technology Annex form the basis for U.S. missile technology controls. The Guidelines provide licensing policy, procedures, review factors, and standard assurances on missile technology exports. The Annex is the list of items of missile-related commodities subject to control, and is divided into two categories. Category I items include missile subsystems, production facilities, and production equipment for missile systems capable of delivering a 500 kg payload to a range of at least 300 km. Category II items include missiles with a 300 km range, regardless of payload, and the major subsystems, production facilities, production and test equipment, materials, and components of missile delivery systems.
NPTC is responsible for administering controls on exports of dual use manufacturing equipment for Category I items and on all dual use items in Category II. A considerable portion of the license applications reviewed for missile-related concerns are for commercial aviation exports, including avionics, navigation, telemetry, composite materials, and test equipment.
The annual Missile Technology Control Regime (MTCR) Plenary and Technical Experts Meeting (TEM) were held in Noordwijk, Netherlands, on October 11-15, 1999. In the information exchange portion of the Plenary, sixteen MTCR members actively participated in sharing information on non-MTCR partner missile programs that constitute serious missile proliferation threats. The information exchange highlighted the need for a global approach to missile nonproliferation, and gave impetus to consideration of an expansive outreach initiative to nonmember countries focused on missile nonproliferation.
At the TEM, the MTCR agreed to relax controls on aluminum powder and other metal powders used as fuel in solid rocket motors, reducing the number of license applications submitted to the Department for metal fuels. State Department licenses for metal fuels will not be affected by this change. Special dual use items for chemical/biological weapons delivery systems were also identified that could be added to the MTCR Equipment and Technology Annex in the future.
The proposal first raised at the TEM meeting in September, to reformat the MTCR Equipment Annex into larger categories based on the newly reformatted Annex structure, was reviewed and action on the proposal tabled for further discussion.
An MTCR seminar was held in Munich, Germany on May 24-26 to discuss possible measures to reduce regional and global security risks, further eliminate existing missile stockpiles, and curtail indigenous missile development programs. Topics of discussion included possible measures to reduce the regional and global security risks involved with specific proliferation cases, the further elimination of existing missile stockpiles and the curtailment of indigenous missile development programs, and the establishment of norms to govern the production, testing, deployment and export of missiles and related technology.
The MTCR held an intercessional Technical Experts Meeting (TEM) in Berlin, Germany on July 4-6. The TEM, at which proposals on technical changes to the MTCR Annex are reviewed and prepared for consideration by the full MTCR membership, considered a proposal tabled by the United States that would expand controls on small fuel efficient engines and integrated navigation systems used in unmanned air vehicles that can become potential delivery vehicles for chemical and biological agents.
The Australia Group (AG) is an informal multilateral forum that cooperates to impede the proliferation of chemical and biological weapons through the harmonization of export controls, the exchange of information, and other diplomatic means. The group was formed in 1985 when, in response to the use of chemical weapons during the Iran-Iraq war, Australia called for a meeting of like-minded countries to consider harmonizing export controls on chemical weapons precursor chemicals. The AG later expanded its focus to include chemical production equipment and technologies. In 1990, the scope was expanded further to include measures to prevent the proliferation of biological weapons. Today, the AG remains a viable, effective mechanism through which participating governments demonstrate their commitment to international nonproliferation objectives.
Thirty-two countries currently participate in the AG. The group's primary focus is the coordination of export controls on an agreed list of dual use items that can be used in the production of chemical and biological weapons. In accordance with the AG control list, BXA maintains export licensing requirements on relevant precursor chemicals, microorganisms and toxins, equipment, and technology.
Regulations implementing the decisions reached at the Australia Group Plenary in October 1999 were published in FY 2000 as part of the Export Administration Regulations (EAR). The new regulations adjust the specifications of some controlled items to narrow controls that caught more than was necessary to accommodate nonproliferation concerns; clarify the application of the rule for mixtures containing AG chemicals that are also identified as Chemical Weapons Convention Schedule 1 chemicals; and add two new corrosion-resistant materials to the control list of substances used to construct heat exchangers that are also controlled by the AG. The U.S. delegation to the AG also took the opportunity offered by the Plenary to present U.S. positions in support of the strengthening of export controls on graphite composite chemical manufacturing equipment, centrifugal separators, and impermeable protective suits.
The AG maintains a denial notification procedure by which members agree to notify the group when a license for a controlled item is denied. This procedure is coupled with a "no undercut policy" whereby members agree not to approve an identical sale without first consulting the member issuing the denial notification. This process helps to prevent the undercutting of a member's denial.
The AG continues to consider potential new members. The group engages in a wide range of contacts to promote greater awareness and understanding of the important role that national export licensing measures play in preventing the proliferation of chemical and biological weapons. These activities include a program of regional seminars and briefings for nonparticipating countries on export licensing practices.
When the U.S. government became aware that Iraq, on the eve of the Persian Gulf War, had enhanced its weapons of mass destruction capability by obtaining imported goods that were exempt from a license requirement, President Bush launched the Enhanced Proliferation Control Initiative (EPCI) in December 1990. EPCI led to the imposition of chemical, biological, and missile end use and end user-based controls that were similar to the nuclear end use and end user-based controls already in effect. The EAR requires that exporters obtain a validated license for the export of an item, even if one is not normally required, if they know or are informed by BXA that the export is for use in nuclear, chemical or biological weapons or missiles, or facilities engaged in such activities. U.S. persons are also restricted from activities in support of nuclear, chemical or biological weapons, or missile-related projects. These regulations are designed to prevent exports that could make a material contribution to proliferation projects of concern, but are not intended to affect legitimate commercial trade.
EPCI began as a unilateral control, but with U.S. leadership, virtually all of the NSG and MTCR member countries have some form of catchall controls, and the United States continues to encourage other countries to adopt similar measures. Information exchanges on EPCI export denials have also enhanced multilateral awareness of proliferation projects of concern.
BXA publishes an EPCI "Entity List" as part of the EAR (Supplement No. 4 to Part 744). Initiated as part of the EPCI clarification project mandated by the Trade Promotion Coordinating Committee chaired by the late Commerce Secretary Ronald Brown, publication of the names of the entities involved in proliferation activities in the EAR provides exporters with better information on which to base international business.
Chemical Weapons Convention
The Chemical Weapons Convention (CWC), signed by more than 150 countries, bans the development, production, acquisition, stockpiling, retention, use and direct or indirect transfer of chemical weapons, and provides for an extensive verification regime. The Convention entered into force on April 29, 1997.
Implemented through the establishment of a CWC Annex, specified chemicals are grouped into three schedules based on their toxicity and other properties enabling their use in chemical weapons. The toxic chemicals and precursors on Schedule 1 pose the highest risk and have few commercial applications; the chemicals and precursors on Schedule 2 pose a significant risk and have certain commercial applications; and Schedule 3 chemicals, while they pose a risk to the purpose of the Convention, also have wide commercial applications. Chemical warfare agents deemed to have direct military applications are controlled by the State Department under the International Traffic in Arms Regulations.
The CWC, which is administered by the Organization for the Prohibition of Chemical Weapons (OPCW), is the first major arms control treaty to have a significant impact on the private sector. The Treaty requires certain commercial chemical production, consumption, and processing facilities to submit data declarations and to permit international inspections. U.S. implementing legislation was enacted to compel domestic industry compliance with the Convention on
October 21, 1998; implementing the regulations were published on December 30, 1999. Effective immediately, the regulations set forth U.S. industry's data declaration and reporting requirements and inspection procedures. Companies exceeding certain production, processing, consumption, export or import thresholds are required to submit the appropriate declarations or reports to BXA.
BXA is the agency responsible for collecting data declarations and hosting OPCW inspections at U.S. companies engaged in chemical activities covered by the CWC. In meeting its CWC responsibilities in FY 2000, BXA (1) designed a secure computer system to receive and process declarations; (2) trained staff to perform chemical determinations; (3) maintained a dedicated CWC web site with the necessary forms and information on CWC requirements; (4) hired, trained, and certified staff to host inspections; (5) conducted mock inspections; and (6) conducted site assistance visits to prepare facilities for OPCW inspections.
Beginning in January 2000, BXA held a series of eight outreach seminars on the CWC regulations with the cooperation of the American Chemistry Council and the Synthetic Organic Chemical Manufacturers Association, and with the assistance of the Federal Bureau of Investigation, the Department of State, and the Defense Department's Defense Threat Reduction Agency. These seminars were designed to educate U.S. chemical industry representatives on the requirements of the regulations.
On April 19-20, BXA representatives conducted their first Site Assistance Visit (SAV) at a company subject to inspection under the CWC. In total, BXA conducted ten SAVs at ten different plant sites in FY 2000 to assist industry personnel in the preparation of pre-inspection briefings, draft facility agreements, methods of identifying and handling confidential business information, and other key elements of CWC industry inspections.
Three thousand seventy-five declarations and reports from 319 chemical companies representing more than 750 plant sites were received and verified by BXA staff and forwarded to the OPCW as required by the CWC regulations. On April 30, 2000, a BXA delegation met with officials of the OPCW, the administrative arm of the CWC, to present the first U.S. national industry declaration. Shortly before the return of the BXA team from The Hague, Netherlands, the first notification of a U.S. industry inspection arrived in the United States on May 4. This first inspection was successfully completed on May 12, followed by an additional 10 inspections in the remaining months of FY 2000.
The Executive Council of the OPCW met on May 16 and took two actions modifying the CWC controls. The first decision was to limit the requirement for declarations for chemical mixtures to those containing 30% or more of Schedule 2B precursor chemicals and Schedule 3 chemicals. The second action was to permit the transfer of consumer goods containing low concentrations of Schedule 2 chemicals to non-State Parties. As of April 29, 2000, all other transfers of Schedule 2 chemicals were, and continue to be, prohibited.
Biological Weapons Convention
The Biological Weapons Convention (BWC) entered into force in 1975 to prohibit the development, production, and stockpiling of biological agents or toxins that do not have peaceful uses. The Third Review Conference of State Parties to the BWC agreed in 1991 to consider ways to strengthen the implementation and effectiveness of the Convention.
BXA is cooperating with other U.S. Government agencies in the development of a protocol to the BWC. U.S. industry's concern about the protection of confidential business information is a significant consideration in crafting the protocol. In FY 2000, BXA worked with industry organizations to coordinate and promote cooperation with government in addressing BWC issues. BXA continued to provide representation for multilateral and bilateral discussions relevant to the BWC, including an Ad Hoc Group working to develop the BWC Protocol, in FY 2000.
Beyond the routine contacts that are a necessary part of the export licensing process, NPTC's staff participated at many industry briefings, trade association seminars, and one-on-one consultations with exporters to clarify the scope of U.S. nuclear and missile technology controls, explain the responsibilities of U.S. industry under the CWC, and clarify the actions taken to control chemical and biological commodities. These efforts support U.S. industry by reassuring buyer and seller alike of the legitimacy of proposed export sales, advise the participants in the transactions of their export control obligations, and explain and reaffirm the rights and obligations of the U.S. chemical industry in their compliance with the CWC.
NPTC's staff also actively engages in bilateral and multilateral consultations with our trading partners who share our nonproliferation goals, and with countries who do not yet have export control systems in place. In the last year, NPTC participated in numerous consultations under the auspices of the multilateral control regimes and international treaty organizations, and in support of BXA's overall international outreach effort to educate non-participatory countries about the benefits and obligations of export control cooperation.
The Department of Commerce requires U.S. companies and other organizations to obtain prior approval from BXA before foreign nationals from certain countries are allowed to work on projects involving controlled technology. An export license is required because the EAR treats any release of controlled technology or software to a foreign national as a "deemed export" to the home country. BXA reviews license applications under the licensing policies that apply to the actual export of the technology or software in question to the home country or countries of the foreign national. The "deemed export" rule is most often encountered in the employment context where a company will release controlled technology or software to a foreign national.
During FY 2000, BXA processed 971 "deemed export" cases, slightly less than the one thousand cases processed during FY 1999. During this period, the license application processing time continued to be 55-60 days. In FY 2000, BXA established a pilot program to speed up the "deemed export" license process. Under this program, companies that hire a stream of foreign technical staff can obtain a one-time approval for the technology proposed for transfer. After the interagency community authorizes the technology for export, additional staff can be added to the Deemed Export License by amendment, subject to referral to the intelligence community.
Sections 3(2)(c) and 7 of the Export Administration Act of 1979, as amended (the Act), authorize the President to restrict the export of goods "where necessary to protect the domestic economy from the excessive drain of scarce materials and to reduce the serious inflationary impact of foreign demand." In support of this objective, Section 7(b)(1) also authorizes the President to monitor exports of certain goods to determine the impact of such exports on the domestic supply, and whether this impact has an adverse effect on the U.S. economy.
BXA also administers export controls under the Energy Policy and Conservation Act, the Mineral Leasing Act, the Naval Petroleum Reserves Production Act, the Outer Continental Shelf Lands Act, and the Forest Resources Conservations and Shortage Relief Act (FRCSRA) of 1990, as amended. BXA continued to conduct economic, regulatory, and technical analyses of Congressionally mandated controls for domestically produced petroleum and unprocessed timber.
During FY 2000, the Department of Commerce controlled certain domestically produced crude oil and unprocessed Western Red Cedar timber harvested from Federal and state lands. Section 7(k) of the Act specifies that for purposes of export controls imposed under this Act, the shipment of crude oil, refined petroleum products, or partially refined petroleum products from the United States for use by the Department of Defense or United States-supported installations or facilities should not be considered as exports. Section 14(a)(13) of the Act requires a report on any monitoring program conducted pursuant to the Act or Section 812 of the Agricultural Act of 1970. This chapter includes a report by the U.S. Department of Agriculture (USDA) on its monitoring activities during FY 2000. (Please see charts beginning on page 45.)
Crude Oil and Refined Petroleum Products
All of the statutes establish various stringent tests (e.g., consumer savings through lower prices for replacement oils) a license applicant must meet before BXA can authorize crude oil exports. BXA can authorize exports only by a national interest finding issued by the President or his delegated representative. The President has retained the authority to make national interest findings under three of the statutes but has delegated to the Secretary of Commerce the authority to make findings under EPCA.
Since the legislation came into effect, there have been only five national interest findings providing exemptions from the statutory prohibitions: 1) as of 1985, the export to Canada of crude oil produced in the lower 48 states; 2) as of 1989, the export of 50,000 barrels per day (B/D) of Alaskan North Slope (ANS) crude pursuant to the U.S.- Canadian Free Trade Agreement; 3) in 1985, the export of Alaskan Cook Inlet crude oil to Pacific Rim energy markets was permitted; 4) in 1992, the export of 25,000 B/D of California heavy crude oil having a gravity (i.e., weight) of 20 degrees API or lower was authorized; and 5) in 1996, exports of ANS crude oil, when transported on U.S.-flag tankers, were determined to be in the national interest.
During FY 2000, exports of domestically produced crude oil consisting of exports to Canada, exports of ANS crude oil pursuant to license exception based on the Trans-Alaska Pipeline Authorization Act (TAPS), and exports of California heavy crude oil pursuant to a Presidential determination totaled $16.5 million barrels or 45,294 B/D. The discussion below reviews exports from the lower 48 states and Alaska.
Exports of Crude Oil from the Lower 48 States
Exports from Alaska
Alaskan North Slope Crude Oil: On May 31, 1996, BXA amended the short supply provisions of the EAR by establishing License Exception TAPS authorizing such exports with certain conditions. The License Exception TAPS was based on: 1) Public Law 104-58, which permits the export of crude oil transported by pipeline over right-of-way granted pursuant to Section 203 of the Trans-Alaska Pipeline Authorization Act (TAPS); 2) the President's April 28, 1996, determination that such exports are in the national interest; and 3) the President's direction to the Secretary of Commerce to issue a license exception with conditions for the export of TAPS crude oil. During FY 2000, U.S. firms exported 10 cargoes of ANS crude oil totaling approximately 10.9 million barrels (29,900 B/D), pursuant to license exception TAPS. These exports to Japan, China, South Korea, and Singapore had a market value of $232 million.
Crude Oil from Cook Inlet: The Department authorizes the export of crude oil derived from state-owned submerged lands in Alaska's Cook Inlet under an individual validated license unless the oil has been or will be transported by a pipeline over a Federal right-of-way granted pursuant to the Mineral Leasing Act or the Trans-Alaska Pipeline Authorization Act. In FY 2000, there was no activity under this program.
Wood Products
BXA administers short supply export controls on Western Red Cedar, as mandated by Section 7(i) of the Act. BXA also administers the ban on exports of unprocessed timber originating from public lands in all or parts of 17 Western states pursuant to FRCSRA.
Western Red Cedar: Section 7(i) of the Act prohibits the export of unprocessed Western Red Cedar (WRC) harvested form state or Federal lands. This prohibition applies to those contracts entered into after September 30, 1979. However, exports of unprocessed WRC harvested from state or Federal lands under contracts entered into before October 1, 1979, are permitted under an export license. During FY 2000, BXA did not issue any export licenses for WRC.
FRCSRA: Under FRCSRA, the Department of Commerce is responsible for administering the ban on the export of unprocessed timber originating from public lands in 17 Western continental states, (or in the alternative, the affected states can request the Secretary of Commerce to authorize them to administer their own programs.) The last log export order remaining in effect was issued under Title VI of the Department of the Interior and Related Agencies Appropriations Act of 1998 (Public Law 105-83), which required the Secretary of Commerce to make permanent the total prohibition on the export of unprocessed timber from public (state) lands contained in the FRCSRA. Specifically, Public Law 105-83 prohibits the export of unprocessed timber originating from state lands in states west of the 100th meridian in the contiguous 48 states with more than 400 million board feet of annual sales volume of such timber. As the Secretary of Commerce has delegated the authority for carrying out the policies and programs necessary to administer laws regarding the control of U.S. exports to the Under Secretary of BXA, the Under Secretary issued the order required under PL 105-83 on January 9, 1998. The practical effect of the order is to make permanent the ban on the export of unprocessed timber originating from Washington state public lands. This order remained in effect during FY 2000.
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.