Where Industry and Security Intersect
What's New | Sitemap | Search
These controls reflect U.S. opposition to acts of international terrorism supported by a foreign government, as well as terrorist acts carried out by designated terrorist entities.
Pursuant to Section 6(j) of the Export Administration Act, the Secretary of State has designated seven countries -- Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria -- as nations whose governments have repeatedly provided support for acts of international terrorism. As noted below, the United States controls multilateral list items destined to military or other sensitive end users in designated terrorist countries for anti-terrorism reasons under Section 6(j) of the Act. The United States controls additional items on the Commerce Control List (CCL) to four of these designated countries (Iran, Sudan, North Korea and Syria) for anti-terrorism reasons under the general authority of Section 6(a) of the Act. Comprehensive trade embargoes have applied to four of these countries (Cuba, Iran, Iraq and Libya) for many years.
The embargo on exports to Cuba is administered by the United States under the Act and other statutes. Among other recent measures on Cuba, in January 1999, the President announced a number of new initiatives, implemented under Commerce and Treasury Department regulations, intended to further aid the Cuban people in their transition to democracy. These measures included case-by-case review of applications to sell food and certain agricultural items to non-governmental entities in Cuba, facilitating exploratory American business trips to Cuba and expansion of people-to-people contacts between the United States and Cuba.
On September 17, 1999, the President announced his decision to ease economic sanctions maintained against North Korea. The President acted in response to North Korea's continued restraint from testing long-range missiles and in pursuit of improved overall relations. On June 19, 2000, the United States published regulations implementing the sanctions-easing program. Under these measures, U.S. exporters may export the vast majority of U.S. consumer products to North Korea without a license, including agricultural, medical, and low-level industrial goods and services. The United States continues to require a license for items on the Commerce Control List (CCL) to North Korea, including items added to the CCL on June 19, 2000. Items on the CCL include multilaterally controlled items, as well as a range of lower-level products and technologies controlled for anti-terrorism and non-proliferation reasons.
Broadly speaking, the Department of Commerce has licensing responsibility for exports and reexports to Cuba, Syria and North Korea and for reexports to Libya; the Department of the Treasury has licensing responsibilities for exports and reexports to Iran and Iraq and for exports to Libya. Both Departments maintain license requirements for exports and reexports to Sudan and the Taliban-controlled areas of Afghanistan. This report does not describe the restrictions administered by the Treasury Department against Iran, Iraq, Sudan and the Taliban.
In addition to specific discussion of the designated terrorist states, this chapter summarizes briefly a revision of the EAR which prohibits exports and certain reexports to Specially Designated Terrorists (SDT) and Foreign Terrorist Organizations (FTO), wherever located.
The "Trade Sanctions Reform and Export Enhancement Act of 2000," contained in Title IX of the 2000 Agriculture Appropriations Act, requires the lifting of unilateral agricultural and medical sanctions worldwide but also requires that a licensing regime be in place for designated terrorist countries (e.g., Cuba, Iran, Libya, Sudan and others). Please see Chapter 5 for more detail on regulations pursuant to this legislation. We anticipate placing restrictions on exports and reexports to Sudan to reflect the trade embargo on Sudan maintained by the Treasury Department. These restrictions will be similar to those imposed on exports and reexports to Iran and Iraq, countries for which the Treasury Department also maintains embargoes.
The Secretary of State has determined that Libya (1979), Syria (1979), Cuba (1982), Iran (1984), North Korea (1988), Iraq (1990) and Sudan (1993) are countries whose governments have repeatedly provided support for acts of international terrorism.
Effective December 28, 1993, the Acting Secretary of State determined that the United States would control five categories of dual-use items subject to multilateral controls to certain sensitive government end users under Section 6(j) of the Act, since these items meet the criteria set forth in Section 6(j)(1)(B). Specifically, the Acting Secretary determined that these items, when exported to military, police or intelligence organizations or to other sensitive end users in a designated terrorist country, could make a significant contribution to that country's military potential or could enhance its ability to support acts of international terrorism. These anti-terrorism controls apply to all designated terrorist countries.
The Acting Secretary also advised that the United States should continue to control other items not specifically controlled under Section 6(j) for general foreign policy purposes under Section 6(a) to terrorist-list countries and that the United States should continue to review the export of such items prior to approval to evaluate whether, under the circumstances of the application, the requirements of Section 6(j) apply. These measures are described in detail below.
Paragraph A below reflects the Section 6(j) controls; paragraphs (B), (C), (D) and (E) reflect the Section 6(a) controls on Iran, Sudan, Syria and North Korea.
A. The Acting Secretary of State determined, effective December 28, 1993, that the export of certain categories of goods and technologies, when destined to military, police, intelligence entities and other sensitive end users, as determined by the Department of State, in any country designated under Section 6(j) of the Act as a country that has repeatedly provided support for acts of international terrorism, "could make a significant contribution to the military potential of such country, including its military logistics capability, or could enhance the ability of such country to support acts of international terrorism." As a result of this determination, the Secretaries of State and Commerce would notify Congress thirty days prior to the issuance of any license for the export of any item from the five categories listed below to sensitive end users in the terrorist countries.
Pursuant to Section 6(j) of the Act, the Department of Commerce requires a license for the export of the following items to military or other sensitive end users in designated terrorist countries:
1) All items subject to national security controls, except computers with a performance level of less than 500 million theoretical operations per second (MTOPS) (Wassenaar Arrangement)(1);
2) All items subject to chemical and biological weapons proliferation controls (Australia Group);
3) All dual-use items subject to missile-proliferation controls (Missile Technology Control Regime);
4) All items subject to nuclear weapons-proliferation controls (Nuclear Referral List); and
5) All military-related items (items controlled by Commerce Control List (CCL) entries ending with the number 18).
B. Pursuant to Section 6(a) of the Act, the United States requires a license for the categories of items listed below for Iran, North Korea, Sudan and Syria to promote U.S. foreign policy goals. Sudan (as of November 4, 1997) and Iran (as of May 7, 1995) are also subject to comprehensive trade and investment embargoes administered by the Treasury Department under the authority granted by the President under the International Emergency Economic Powers Act (IEEPA). The Department of State reviews license applications for items controlled under Section 6(a) of the Act before approval to determine whether the requirements of Section 6(j) apply. If the Secretary of State determines that the particular export "could make a significant contribution to the military potential of such country, including its military logistics capability, or could enhance the ability of such country to support acts of international terrorism," the Departments of Commerce and State will notify the appropriate Congressional committees thirty days before issuing a license. The categories of items controlled under Section 6(a) include, but are not limited to:
C. Exports of the following additional items to Iran and Sudan are subject to a license requirement under the Export Administration Regulations (EAR) for foreign policy reasons:
D. Export of the following additional item to Iran is subject to a license
requirement under the EAR for foreign policy reasons: portable electric power
generators.
E. Exports of the following additional items to North Korea are subject to a license requirement under the EAR for foreign policy reasons:
- Large boring equipment capable of drilling holes greater than two feet in diameter, and
- Large earth-moving equipment used in the mining industry;
Digital time delay generators with a resolution of 50 nanoseconds or less over time intervals of 1 microsecond or greater, or
Multi-channel (three or more) or modular time interval meter and chronometry equipment with resolution of 50 nanoseconds or less over time intervals of 1 microsecond or greater;
A. The Department of Commerce requires a license for export to Cuba of virtually all commodities, technology and software, except:
B. The United States generally denies export license applications for exports to Cuba; however, the Commerce Department will consider applications for the following on a case-by-case basis:
C. The United States reviews applications for exports of donated and commercially supplied medicine or medical items to Cuba on a case-by-case basis. The United States will not restrict exports of these items, except in the following cases:
The United States has a general policy of denial for items on the Commerce Control List to all military or police end users or end uses, and items with potential nuclear applicability to nuclear end users or end use in North Korea. Certain items on the Commerce Control List may be licensed to civil end users or end uses on a case-by-case basis, subject to interagency review by the United States Government. Commodities, technology or software not on the Commerce Control List may be exported to North Korea without a license, provided that the end user is not involved in proliferation activities, in which case provisions of the Enhanced Proliferation Control Initiative (EPCI) "catch-all" control would apply.
A. Reexport authorization is required from Commerce for foreign policy purposes for export from third countries to Libya of all U.S.-origin goods, technology or software, except for the following:
B. Applications for reexport authorization will generally be denied for the following:
C. Exceptions are considered on a case-by-case basis for the following:
D. All other reexports will generally be denied.
The United States has a policy of denial for all end users in Sudan for all items controlled for chemical, biological, missile and nuclear proliferation reasons, military-related items controlled for national security reasons (CCL entries ending in the number 18) and certain items controlled for national security or foreign policy reasons for export and reexport, such as aircraft, cryptologic items, aircraft and explosive device detectors. Other items controlled to Sudan for national security or foreign policy reasons are subject to a policy of denial for military end users or end uses and are reviewed on a case-by-case basis for non-military end users or end uses. Pursuant to Executive Order 13067 of November 3, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Sudan. The Department of Commerce will only review a license application after it has been approved by the Department of the Treasury.
The United States has a policy of generally denying exports and reexports of chemical, biological and missile items controlled for proliferation reasons, military-related items controlled for national security reasons (CCL entries ending in the number 18) and certain other national security or foreign policy controlled items, such as cryptologic items and explosive device detectors, to all end users in Syria. We review other national security and foreign policy controlled items under a policy of denial to military end users and end uses and on a case-by-case basis to non-military end users and end uses.
The United States will consider applications for export and reexport to Syria on a case-by-case basis if they meet the following conditions:
a. the transaction involves the reexport to Syria of items where Syria was not the intended ultimate destination at the time of original export from the United States, provided that the export from the United States occurred prior to the applicable contract sanctity date;
b. the U.S. content value of foreign-produced commodities is 20 percent or less;
c. the commodities are medical equipment; or
d. the commodities are aircraft equipment necessary to maintain the safety of civil aviation and the safe operation of commercial passenger aircraft.
Applicants wishing to have contract sanctity considered in reviewing their applications must submit adequate documentation demonstrating the existence of a contract that predates the imposition or expansion of controls on the item(s) intended for export.
The United States has a policy of denial for all items controlled for national security or foreign policy reasons that require a license to Iran. Pursuant to Executive Order 12959 of May 6, 1995, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Iran.
The United States requires a license for exports and reexports to Specially Designated Terrorists (SDT) and Foreign Terrorist Organizations (FTO) of all items subject to the EAR by U.S. persons and for all reexports to such entities of items on the CCL by foreign persons.
The United States has a general policy of denial for applications to export and reexport to SDTs and FTOs. A list of designated SDTs and FTOs is available in the Appendices to 31 CFR Chapter V. Applications for licenses to export or reexport to FTOs are denied consistent with the provisions of the 1996 Anti-Terrorism and Effective Death Penalty Act.
Anti-terrorism controls effectively distance the United States from nations that have repeatedly supported acts of international terrorism and from individuals and organizations that commit the same. Further, the controls demonstrate the firm resolve of the United States not to trade with nations or entities that do not adhere to acceptable norms of international behavior. The policy provides the United States with the means to control any U.S. goods or services that might contribute to the military potential of designated countries and to limit the availability of such goods for use in support of international terrorism.
Cuba
The United States imposed an embargo several decades ago when Cuban actions posed a serious threat to the stability of the Western Hemisphere, and the Cuban government expropriated property from U.S. citizens without compensation. In March 1982, as a result of Cuba's support for insurgent groups that engaged in terrorism, the Secretary of State designated it as a state sponsor of terrorism under Section 6(j) of the Act.
North Korea
Although there has been a bilateral dialogue on terrorism with North Korea, controls remain because of unresolved issues concerning North Korea's continuing support of international terrorism, including, but not limited to, harboring members of the Japanese Red Army Faction (JRAF). The alleged abduction of Japanese individuals by North Korean intelligence services during the 1980s and 1990s remains of concern as well. Although there is no recent evidence of North Korean complicity in the disappearance of Japanese nationals, government activity in other areas supports the continuation of the controls. The purpose of the controls includes restricting the import of equipment useful in enhancing the military or terrorist-supporting capabilities of the regime and addressing other U.S. foreign policy concerns, including human rights, nonproliferation and regional stability.
Libya
The purpose of export and reexport controls toward Libya is to demonstrate U.S. opposition to, and to distance the United States from, Libya's intervention in the affairs of neighboring states and support for acts of international terrorism and international subversive activities. Although Libya has made progress in distancing itself from terrorist organizations and activities and in its multilateral relations as a whole, the United States Government believes that further progress is needed before the United States can resume normal economic ties.
Sudan
Evidence indicates that Sudan allows the use of its territory as a sanctuary for terrorists including the Osama bin Ladin, al-Qaida, the Egyptian Islamic Group, the Egyptian Islamic Jihad, Hamas and Palestinian Islamic Jihad. Safe houses and other facilities used to support radical groups exist in Sudan. The embargo and the export controls demonstrate U.S. opposition to Sudan's support for international terrorism and restrict access to items that could make a significant contribution to Sudan's military capability and ability to support international terrorism.
Syria
Although there has been no evidence of direct involvement by the Syrian Government in the planning or implementation of terrorist acts since 1986, Syria continues to provide sanctuary and support to groups that engage in terrorism. The trade controls reflect U.S. opposition to Syria's support of terrorist groups, prevent significant U.S. contribution to Syria's military capabilities and ability to support international terrorism and promote other U.S. foreign policy interests, including human rights and regional stability.
Iran
These controls respond to the continued Iranian sponsorship of terrorism. The purpose of the controls is to restrict equipment that would be useful in enhancing Iran's military or terrorist-supporting capabilities and to address other U.S. foreign policy concerns, including human rights, non-proliferation and regional stability.
The controls allow the United States to prevent shipments of U.S.-origin equipment to Iran for uses that could pose a direct threat to U.S. interests. Iran actively continues to support groups that practice terrorism, including terrorism to disrupt the Middle East peace process. By restricting items with military use, the controls demonstrate the resolve of the United States not to provide any direct or indirect military support for Iran and to support other U.S. foreign policy objectives.
SDT/FTO
The purpose of these controls is to allow the Department of Commerce to use its enforcement mechanisms and resources to support U.S. counterterrorism efforts.
Although widespread availability of comparable goods from foreign sources greatly limits the effectiveness of these controls, they do restrict access by these countries and persons to U.S.-origin commodities, technology and software, and demonstrate the determination of the United States to oppose and distance itself from acts of international terrorism. In extending controls toward Iran, Syria and Sudan, the Secretary has determined that they are likely to achieve the intended foreign policy purpose. During the period that sanctions have been imposed against the designated countries, their level of active support for terrorist activities has generally declined. Several countries have sought to be removed from the terrorism list.
Cuba
The United States maintains an embargo and anti-terrorist sanctions against Cuba to express U.S. opposition to the continued repressive policies of the Castro government. The embargo has been modified on numerous occasions in the interest of aiding the Cuban people in bringing about a transition to democracy and a free market economy and expanding humanitarian assistance to the Cuban people.
North Korea
The controls deny the North Korean government the commodities, technology and software to support acts of international terrorism or to expand or increase proliferation activities.
Libya
The United States maintains export and reexport prohibitions for commodities controlled for national security reasons, for certain types of oil terminal and refining equipment, for items used to service or maintain Libyan aircraft and airfields, and for virtually all other items subject to the EAR. The intent of these restrictions is to prevent U.S. contributions to Libya's involvement in activities detrimental to United States national security and foreign policy; in military activities; and in efforts to destabilize nations friendly to the United States. The controls send a clear signal that the United States is unwilling to permit trade in light of Libya's behavior.
Sudan
The controls on Sudan affirm the commitment of the United States to oppose international terrorism by limiting Sudan's ability to obtain and use U.S.-origin items in support of terrorist or military activities. These controls send a clear message to Sudan of strong U.S. opposition to its support for terrorist groups. The additional restrictions the Commerce Department intends to impose will further U.S. efforts to ensure that U.S.-origin items are not directed to Sudan.
Syria
These controls are an important means of demonstrating U.S. resolve by limiting Syria's ability to obtain U.S.-origin items that could be used to support terrorist activities or contribute significantly to Syria's military potential. Although other nations produce many of the items subject to U.S. anti-terrorism controls, this fact does not eliminate the need to send a strong signal to the Syrian government of U.S. disapproval of its support for groups involved in terrorism.
Iran
The controls on Iran restrict its access to specified U.S.-origin items that could be used to threaten U.S. interests. The United States has sought, and will continue to seek, the cooperation of other countries in cutting off the flow of military and military-related equipment to Iran.
SDT/FTO
These controls affirm U.S. opposition to international terrorism by limiting the ability of terrorist organizations and specified individuals to obtain and use U.S.-origin items in terrorist operations. The controls send a strong message of U.S. opposition to terrorism not only to the specified individuals and organizations but also to other countries.
In extending these controls, the Secretary has determined that they are compatible with the foreign policy objectives of the United States toward nations and persons who support terrorism. They are also compatible with overall U.S. policy toward Iran, Sudan, Cuba, North Korea, Libya and Syria and terrorist groups and organizations. In addition, the controls are consistent with U.S. efforts to restrict the flow of items and other forms of material support to countries, individuals or groups for military or terrorist purposes.
Most countries are generally supportive of U.S. efforts to fight terrorism and stop the proliferation of weapons of mass destruction in countries of concern. However, almost none have imposed embargoes as comprehensive as those the United States has imposed. Certain U.S. controls have been challenged by other countries as extraterritorial and have prompted opposition among many of our major trading partners, including some close allies, and have become a point of contention with countries who are members of the European Union. This reaction to perceived extraterritorial application has led some foreign firms to design-out U.S. components or to cite the lack of their own national sanctions as a marketing tool to secure business contracts that otherwise may have gone to U.S. companies. In some instances, foreign firms are instructed by their governments to ignore U.S. reexport controls.
Cuba
Although most countries recognize the right of the United States to determine its own foreign policy and security concerns, many countries, particularly Canada, Mexico and the members of the European Union, opposed the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms-Burton).
North Korea
The United States maintained a comprehensive trade embargo against North Korea for 50 years. In general, the United States' allies have largely acted in concert with the United States to deny North Korea modern equipment and technology. The recent U.S. sanctions easing toward North Korea and the removal of some U.S. controls have been echoed by other western countries. We anticipate that U.S. allies will follow the United States' lead and not go beyond the scope of U.S. liberalizations until North Korea places further limits on its proliferation and military activities.
Libya
Many countries believe that in turning over the two Libyan nationals for trial, Libya fulfilled its obligations to the United Nations in regard to the Pan Am 103 bombing. The U.N. suspended its sanctions against Libya in April 1999. These same countries have urged the United States to repeal the Iran-Libya Sanctions Act (ILSA) and to remove sanctions that the United States maintains under IEEPA on items such as aircraft parts and components and oil well equipment.
Sudan
The United States imposed the controls (and the subsequent embargo) in response to credible evidence that Sudan assists international terrorist groups, destabilizes neighboring governments and violates human rights. The United States has consulted with key allies and urged them to take all possible measures to convince Sudan to halt its support for terrorism, and in response some countries have complied. For example, the Organization of African Unity (OAU) passed a resolution in September 1995 calling on Sudan to extradite to Ethiopia three suspects charged with the June 1995 assassination attempt against President Mubarak of Egypt. In 1996 the United Nations Security Council adopted three resolutions specific to Sudan: the first resolution reaffirmed the OAU resolution; the second resolution called on Sudan to stop support for terrorism; and the third resolution imposed diplomatic and travel sanctions. We do not expect any negative reaction to the imposition of additional regulations as the new regulations simply underscore existing restrictions maintained by the Treasury Department.
Syria
The United States maintains controls in response to Syria's lack of concrete steps, including the restriction of arms supplies, to end support for international terrorist groups that maintain a presence in Syria and Syrian-controlled areas of Lebanon. Although other countries concur that Syria's regional activities have a destabilizing effect, very few countries maintain control regulations similar to those implemented by the United States.
Iran
Regarding the controls on specific product categories, other countries share the U.S. concern over Iran's support of terrorism, human rights abuses, and attempts to acquire weapons of mass destruction. The 33 members of the Wassenaar Arrangement on Conventional Arms and Dual-Use Goods and Technologies (including the United States) have recognized Iran as a country whose behavior is a cause of concern. In general, however, U.S. controls on commercial goods to Iran are more stringent than those of other countries. Iran's trade partners include Germany, Japan, the United Kingdom and many other nations that are members of the Organization for Economic Cooperation and Development.
SDT/FTO
Most countries support U.S. efforts to fight terrorism and block efforts by terrorist organizations and individuals to obtain commodities with potential use in terrorist operations. However, while some countries are considering restrictive legislation, very few countries maintain control regulations similar to those implemented by the United States.
Cuba
The United States requires a license for the export and reexport of virtually all U.S.-origin commodities, technology, and software to Cuba. In recent years, the number of license applications that the United States approved for exports to Cuba has increased significantly over levels in the mid-1990s, when the United States generally approved about 100 licenses per year. In FY 2000, the United States approved 310 applications valued at $737 million, up from 183 applications in FY 1999 and 128 in FY 1998. Much of the increase in the number and value of export license applications that the United States approved for Cuba can be attributed to recent changes in U.S. export policies, including the resumption of direct flights to Cuba, expedited processing for applications to export medicines and medical supplies and equipment to Cuba, and a case-by-case review of license applications to export food and certain agricultural commodities for sale to independent non-government entities in Cuba. The United States denied two export license applications (valued at $20.2 million) in FY 2000 and returned without action (RWAd) 27 license applications worth $107.8 million.
Fiscal Year |
Number of Applications |
Total Value in U.S. Dollars |
|---|---|---|
1994 |
73 |
$618,991,550 |
1995 |
111 |
$604,004,985 |
1996 |
83 |
$592,738,313 |
1997 |
87 |
$493,414,819 |
1998 |
128 |
$544,659,988 |
1999 |
181 |
$758,407,893 |
2000 |
310 |
$737,108,231 |
TOTAL (1994-2000) |
973 |
$4,349,325,779 |
The majority of the export licenses that the United States approved for Cuba in FY 2000 (273 of the 310 cases) were for EAR99 items, including medicines and medical supplies, instruments, equipment and gift parcels; and for aircraft on temporary sojourn in Cuba (33 cases).
In general, the U.S. regions and economic sectors affected most by the trade embargo are southern Florida (particularly the port area of Tampa), producers of agricultural products (perishable products, in particular) and exporters of other products that benefit from the cost advantages of the United States' proximity with Cuba.
North Korea
U.S. export sanctions on North Korea have had a minimal impact on U.S. industry. North Korea's total imports average about $1-2 billion per year, and the primary imports include petroleum, grain, coking coal, machinery and equipment, and consumer goods. As reported by the Korea Trade Promotion Corporation (KOTRA), North Korea's five major trading partners are China, Japan, Russia, South Korea, and Germany, which account for more than 60 percent of its total trade (exports plus imports). The Central Intelligence Agency estimates that imports totaled $954 million in 1998, including imports of petroleum, coking coal, machinery, and grain.
U.S. exports to North Korea, although remaining far below the export levels of other developed countries, increased significantly after the signing of the U.S.-North Korea Agreed Framework in October of 1994, rising from only $179,730 in 1994 to between $3 and $4 million each year from 1995 through 1998. In 1999, U.S. exports to North Korea nearly tripled to $11.3 million. The vast majority of U.S. exports were in the form of dairy products (milk and cream), cereals, and charitable donations.
The total number of export license applications that the United States approved for North Korea experienced a corresponding surge, increasing from only 6 licenses (valued at $66,443) in FY 1994 to an annual average of 40 licenses, valued at more than $574.5 million through FY 1999 (see Table 3). In FY 2000, only 10 licenses for exports to North Korea were approved, valued at $31.1 million. No applications were rejected during FY 2000, and two applications (valued at $3.2 million) were returned without action.
Fiscal Year |
Number of Applications |
Total Value in U.S. Dollars |
|---|---|---|
1994 |
6 |
$66,443 |
1995 |
27 |
$366,498,433 |
1996 |
39 |
$209,134,369 |
1997 |
47 |
$393,281,396 |
1998 |
43 |
$129,113,580 |
1999 |
32 |
$407,887,147 |
2000 |
9 |
$31,130,643 |
TOTAL |
203 |
$1,537,112,011 |
On September 17, 1999, the President announced his decision to ease some of the sanctions maintained against North Korea and administered under the Trading with the Enemy Act, the Defense Production Act, and the Department of Commerce's Export Administration Regulations. The sanctions easing was implemented in June 2000, in view of North Korea's assurances that it would continue its moratorium on the testing of long-range ballistic missiles. The easing of U.S. sanctions makes most consumer goods available for export to North Korea and allows imports of most North Korean-origin goods into the United States.
Libya
U.S.-origin products comprised a negligible percentage of Libyan imports in Fiscal Year 2000. This is in stark contrast to the value of U.S. exports to Libya as recently as the mid-1980s, when U.S. exports reached as high as $310.2 million (FY 1985).
U.S. exports to Libya have declined steadily since 1979, when export controls were first tightened. Since then, the United States has authorized exports to fulfill pre-1982 contractual obligations and humanitarian aid. Annual U.S. exports and reexports to Libya fell from $860 million in 1979 to less than $1 million annually from 1987 through 1994. Total U.S. exports to Libya have been virtually zero for every year from 1992 through 1999. In FY 2000, exports totaled $1.6 million due to the shipment of corn. The Department of Commerce, which issues licenses for reexports to Libya, issued one license and denied one license in FY 2000.
Sudan
U.S. unilateral export sanctions on Sudan have had only a minor affect on U.S. industry. Sudan's poor economic performance over the past decade, a result of the ongoing civil war, adverse weather, and a ban on International Monetary Fund assistance, prevents the country from importing a significant amount of goods from any supplier, including the United States. Before the U.S. embargo on Sudan went into effect on November 4, 1997, the small amount that Sudan imported from the United States generally did not require an export license and thus was generally not affected by the export controls.
The U.S. aerospace industry sector appears to have been affected the most by the anti-terrorism controls on Sudan. Aircraft exports from the United States to Sudan totaled more than $6.4 million in 1992, but no exports of aircraft from the United States to Sudan have been reported since 1994. Exports of aircraft engines and aircraft engine parts from the United States to Sudan show a similar decline, falling from $845,142 in 1992 to barely $10,000 in 1997. In fact, nearly all U.S. aerospace exports to Sudan in 1997 ($71,578) consisted of miscellaneous aircraft parts and equipment. By 1998, U.S. aerospace exports to Sudan had fallen to virtually zero.
The total number of export licenses that the United States issued for Sudan was negligible before the implementation of sanctions, since, as discussed above, low technology items (which did not require export licenses prior to the implementation) constituted the bulk of U.S. exports. After the United States implemented sanctions on Sudan, the Office of Foreign Assets Control (OFAC) at the Department of Treasury also acquired export control authority for Sudan. Since that time, the Department of Commerce has only processed license applications with Sudanese end users when the application is for a "deemed export."
Fiscal Year |
Total Applications Approved |
Total Value (in U.S. dollars) |
|---|---|---|
1992 |
1 |
$25 |
1993 |
2 |
$5,404,000 |
1994 |
0 |
$0 |
1995 |
0 |
$0 |
1996 |
7 |
$571,992 |
1997 |
10 |
$7,095,973 |
1998 |
0 |
$0 |
1999 |
1 |
$1 |
2000 |
1 |
$1 |
In FY 2000, the United States approved one license application for a deemed export to a Sudanese national employed by a U.S. firm. In addition, the United States returned without action (RWAd) 6 applications valued at $1.6 million, with instructions for the exporter to contact the Department of Treasury/Office of Foreign Assets Controls regarding these proposed exports. We do not anticipate that the new regulations will have a significant impact on U.S. industry.
Syria
U.S. controls on exports to Syria have had a minimal impact on U.S. industry because the United States does not require a license for most items in the leading export sectors to Syria. Despite recent setbacks to Syria's economy, including reduced oil revenues, a heavy public debt burden, and domestic financial and economic difficulties, the economic reforms and infrastructure improvements undertaken by the government in the early 1990s, while limited, have enhanced the country's potential as a market for U.S. exports. Agricultural items and EAR99 petroleum industry items do not usually require a license for export to Syria.
From 1992-1999, the volume of U.S. exports to Syria has been relatively stable, falling within the range between $161 million (1998) and $226 million per year (1996). In calendar year 1999, U.S. exports totaled $170.4 million. Exports of cereals accounted for about a quarter of exports, as did exports of various types of machinery; other leading exports were tobacco and pharmaceuticals.
The average annual value of export licenses issued by the Department of Commerce for Syria has increased significantly in the last ten years. In FY 1991, the United States approved only eight licenses with a total value of $1,041,504. From an annual average of just under
$45 million per year in FY 1992 and FY 1993, the value of items that Commerce has licensed for export to Syria has risen to more than $83 million per year during the last six years (i.e., FY 1994 through FY 1999). In FY 2000 this upward trend continued with the approval of 121 licenses valued at $141.5 million.
The majority of items that the United States licensed for export to Syria during the period covered by Table 4 fall within the categories of aircraft parts and components, digital computers, and certain electronic devices and telecommunications equipment controlled only for foreign policy reasons. The Commerce Department denied 66 applications for Syria from FY 1991 through FY 2000, valued at $32.7 million.
| Fiscal Year |
Total Applications Approved |
Total Value |
|---|---|---|
| 1991 |
8 |
$1,041,504 |
| 1992 |
31 |
$46,366,527 |
| 1993 |
106 |
$42,896,103 |
| 1994 |
167 |
$76,379,096 |
| 1995 |
139 |
$68,298,135 |
| 1996 |
80 |
$81,006,877 |
| 1997 |
100 |
$107,003,346 |
| 1998 |
81 |
$80,707,010 |
| 1999 |
100 |
$86,534,591 |
| 2000 |
121 |
$141,539,669 |
The U.S. policy of reviewing export licenses for the export of aircraft parts and components and aircraft engine parts and components to Syria for air safety on a case-by-case basis has led to an increase in U.S. aerospace exports to Syria. U.S. exports of aircraft engine parts to Syria from 1991-98 totaled $3.1 million (slightly more than 17.4 percent of total U.S. aerospace exports to Syria during this period) while exports of avionics equipment totaled only $355,596 (just
1.9 percent of total U.S. aerospace exports to Syria). In 1998, miscellaneous aircraft parts and equipment accounted for 71.4 percent ($1.39 million) of total U.S. aerospace exports to Syria, while exports of avionics equipment totaled $52,139 (2.7 percent of total U.S. aerospace exports to Syria). Exports of aircraft engine parts to Syria, which had fallen to virtually zero in 1997, increased to $503,991 in 1998 (25.9 percent of total 1998 U.S. aerospace exports to Syria).
The U.S. policy of not approving the sale of new aircraft to Syria is resulting in a gradual shift away from the export of aircraft parts and components for U.S.-origin planes to Syria and toward the export of parts for non-U.S.-origin planes. Although Syrian Arab Airlines (SAA) currently operates several Boeing aircraft, which, because they are all 20-25 years old, require large amounts of spare and maintenance parts to continue operating safely, their recent purchase of six Airbus aircraft indicate that the Boeing aircraft may be retired. Many of the components currently required by SAA for use on the Boeing aircraft are provided by U.S. exporters. Although the impact of retiring the Boeing aircraft on U.S. exporters has not yet been determined, U.S. exporters are also providing parts and components for the Airbus aircraft, albeit at lower levels.
Iran
U.S. policy is to deny dual-use licenses for Iran, consistent with the Iran-Iraq Arms Non-proliferation Act of 1992 contained in the National Defense Authorization Act of FY 1993 (NDAA) and the U.S. trade and investment embargo of 1995. Prior to the enactment of the NDAA and the imposition of the embargo, U.S. exports to Iran rose sharply in the early 1990s in response to Iran's removal of certain import restrictions. From a total of only $166 million in 1990, U.S. exports to Iran increased to $527 million in 1991 and rose to $747 million in 1992. From 1991 through 1994, U.S. exports to Iran totaled close to $2.2 billion, making the United States the sixth largest exporter to Iran during this period. Those exports, however, amounted to only five percent of Iran's total imports and less than one percent of U.S. exports.
Following the denial policy mandated by FY 1993 NDAA and the 1995 U.S. trade and investment embargo, U.S. exports to Iran fell $200 million-$300 million per year. Total U.S. exports to Iran averaged $626 million per year from 1991 through 1993, but only $302 million per year for 1994 and 1995. In FY 1995 and 1996, no applications for exports to Iran were approved by the United States. Since 1997, the United States has only approved applications for "deemed exports" (i.e., transfers of controlled U.S. technology to Iranian nationals legally residing in and working in the United States), rather than actual exports. In FY 2000, the United States approved 23 deemed export licenses for Iranian nationals.
In contrast, during the four fiscal years prior to FY 1995 (i.e., FY 1991-94), the United States approved an average of $177 million in applications to Iran each year. Table 5 shows the impact of the NDAA on U.S. trade with Iran:
Fiscal Year |
Number of Applications |
Total Value in U.S. Dollars |
|---|---|---|
1991 |
89 |
$ 60,149,182 |
1992 |
131 |
$567,559,528 |
1993 |
44 |
63,834,952 |
1994 |
10 |
$ 16,774,377 |
1995 |
0 |
$0 |
1996 |
0 |
$0 |
1997 |
5 |
$19 |
1998 |
6 |
$10,012 |
1999 |
10 |
$20,408 |
2000 |
23 |
$35 |
The 1995 U.S. trade and investment embargo radically transformed the nature, as well as the volume, of U.S. trade with Iran. Since 1996 (the first full year of the embargo) the top U.S. exports to Iran have been completely different from the top export categories of previous years. Most of the items the United States exported to Iran beginning in 1996, and continuing through 2000, were humanitarian goods that closely resembled those exported to other embargoed countries such as Cuba and North Korea. In calendar year 2000, for example, 99 percent of U.S. exports to Iran were in the form of cereals; printed materials such as books and newspapers made up the remaining percentage point.
S.I.C. Number |
Description of Goods |
Total Value |
|---|---|---|
3511 |
Turbines & turbine generator sets |
$322.5 million |
3531 |
Construction machinery & parts |
$307.8 million |
3533 |
Oil & gas field equipment |
$250.1 million |
2044 |
Milled rice & by-products |
$166.3 million |
0115 |
Corn |
$137.4 million |
2873 |
Nitrogenous fertilizers |
$124.2 million |
3714 |
Motor vehicle parts & accessories |
$50.8 million |
2821 |
Plastics materials & resins |
$45.4 million |
| 3743 |
Railroad equipment & parts |
$42.7 million |
3569 |
General industrial machinery & equipment |
$41.8 million |
The data in Table 6 indicate that the agricultural and oil industry sectors were among those most directly affected by the embargo. Additionally, the U.S. aerospace industry was significantly affected by both the NDAA of FY 1993, and the imposition of the trade embargo on Iran in 1995. From 1991 through 1994, U.S. exports of aircraft engine parts to Iran totaled almost
$9.4 million, averaging $2.3 million per year and peaking at more than $7.5 million in 1994. Exports of aircraft engine parts to Iran declined sharply in 1995, as the license denial policy mandated by the NDAA of 1993 and the U.S. trade embargo went into effect. Of the $72,374 in total U.S. aerospace exports to Iran during 1995, almost 92 percent ($66,373) consisted of miscellaneous aircraft parts and equipment (a category that does not include aircraft engines and parts or avionics equipment). By 1996, the first year that the trade embargo was fully in effect, total U.S. aerospace exports to Iran declined to virtually zero.
Prior to the U.S. embargo on Iran, the United States competed with Iran's other major trading partners in areas including general industrial machinery, motor vehicles and motor vehicle parts, power generating machinery, measuring and controlling devices, electronic computers, plastics and resins, transportation equipment, and industrial organic chemicals. In 1998, Iran imported a total of $13.8 billion in goods such as machinery, metals, and pharmaceuticals. Iran's leading sources of these products in 1998 were Germany, Italy, Japan, the United Arab Emirates, the United Kingdom and Belgium.
The most damaging effect of the Iran embargo on U.S. industry is the reaction of foreign firms to U.S. re-export requirements. U.S. exporters report that their products are often designed-out of foreign manufactured goods to insure that foreign exports do not fall within the scope of U.S. controls. This "designing-out" damages U.S. exports, both for sales to embargoed countries as well as non-embargoed countries.
The Secretary of State announced an easing of the embargo on March 17, 2000. The measures implemented at that time affected only the import of certain Iranian goods to the United States. Therefore, the liberalization has had no impact on U.S. exports to Iran.
SDT/FTO
Commerce did not review any licenses destined for SDTs or FTOs in FY 2000. The economic impact of these controls is minimal. The Office of Foreign Assets Control maintains restrictions on activities of U.S. persons involving SDTs and FTOs. This control augments those restrictions.
Because of the well-publicized involvement of these countries in acts of international terrorism, there is public knowledge of, and support for, these controls, which facilitates enforcement. The large number of items exported in normal trade to other countries - including some aircraft items and consumer goods that have many producers and end users around the world -- creates innumerable procurement opportunities for brokers, agents, and front companies working for these countries. In addition, differences in export laws and standards of evidence for violations also complicate law enforcement cooperation between countries.
The Department of Commerce views these controls as a key enforcement target, using regular outreach efforts to keep businesses informed of concerns and gathering leads on activities of concern, safeguard visits to verify end use and end users of U.S. commodities, and other programs to maintain a strong enforcement effort. The Commerce Department is moving to develop a strong program to deal with procurement by or for terrorist groups. This program includes enhanced agent training, development of a targeted outreach program to familiarize U.S. business with concerns, and close cooperation with lead agencies working terrorism issues.
On November 6, 2000, the Department of Commerce, via the Federal Register and via BXA's web page, solicited comments from industry on the effectiveness of foreign policy based export controls. No comments were received specific to the controls described in this chapter. A more detailed review of the comments is available in Appendix I.
Prior to implementing the liberalized policy on medical sales to Cuba (announced May 13, 1998) the Department of Commerce consulted with industry representatives from the pharmaceutical and medical sectors. In response, the Department of Commerce posted a special page on its web site in October 1999 explaining the process and providing guidance to industry. On July 15, 1999, the Commerce Department and other agency representatives briefed over 75 company representatives on this new policy.
One-half of the comment letters received by the Department of Commerce from industry during the official comment period addressed the need to lift U.S. unilateral reexport controls on Libya. The letters came from PEC/SEA, NAM, NFTC, PESA, Baker Hughes, Conoco, Inc. and Halliburton Company. They all struck a common theme: the Libyan market is growing, and continued reexport controls ensure that U.S. companies will be left out of the market without any resulting foreign policy benefit. The PEC/SEA noted, "The chief impact of the reexport controls is to provide rationale for competitors to encourage countries to 'design-out' U.S. products for the Libyan market -- a market that is beginning a dramatic expansion. Without question the extension of these reexport controls would damage the reputation of the United States as a reliable supplier."
Many of these letters called for the Secretary of Commerce not to extend the Libyan reexport controls for 2001. The organizations cited the continued existence of an embargo on Libya, as well as the option of continuing reexport controls on items controlled for national security, non-proliferation or anti-terrorism reasons, while liberalizing non-sensitive reexports. Baker Hughes noted the value of at least a partial liberalization of reexport controls: "The continued existence of the virtually total U.S. embargo on trade with Libya ensures that the United States will remain out of the Libyan market, but the suggested change in the reexport control would provide a benefit for U.S. companies even in the context of continued broad U.S. sanctions against Libya."
The Commerce Department continues to receive inquiries and to consult with industry in regard to licensing policy and practices in Sudan, Syria, and Iran and for SDT/FTOs. The Commerce Department works in coordination with the Departments of State and Defense, and the Office of Foreign Assets Control (OFAC) at the Department of the Treasury to keep industry informed on changes in licensing requirements and policies toward embargoed and terrorist-designated states.
The United States continues to consult with a number of countries, on both a bilateral and a multilateral basis, on activities by designated terrorist states in support of international terrorism. The U.S. Government also holds ongoing consultations on SDTs and FTOs. In general, most countries are supportive of U.S. anti-terrorism efforts but do not implement strict export control programs like those of the United States.
Cuba
The Administration has worked hard to resolve disputes that arise from implementation of the Libertad Act with other countries. Friction between the United States and the European Union (EU) over policy toward Cuba has diminished substantially with adoption by the Europeans of a binding policy that links expanded ties to Cuba to improvements in human rights conditions and advances toward democracy by Cuba's communist government. The United States viewed the announcement that EU members would evaluate future relations with Cuba according to the ratification and observance of international human rights conventions as an affirmation of the international community's commitment to fostering human rights and democracy in Cuba.
North Korea
The United States consults on an ongoing basis with its regional allies regarding anti-terrorism controls on North Korea. In particular, the U.S. works closely with Japan on continuing anti-terrorism controls on North Korea.
Libya
Extensive consultation with other nations on Libyan controls continues to take place under UN auspices. The United States has also conducted numerous bilateral discussions on this topic.
Sudan
The United States continues to consult with other countries in regard to the continuing fighting within Sudan, the resulting refugee problem with its associated food shortages, and the military acts against refugee relief and humanitarian aid workers committed by combatants on both sides of Sudan's internal dispute. Many of these consultations have occurred within the forum of the United Nations. Additionally, the U.S. Special Envoy for Sudan traveled to Khartoum in March 2000.
Syria
The United States consults on an ongoing basis with Syria and the other countries involved in, or party to, the Middle East peace process.
Iran
The United States has an ongoing dialogue with its allies and partners on Iran's activities and outreach. The United States continues to work with other states to curb Iran's proliferation activities.
SDT/FTO
The United States cooperates with allies and partners and shares information on SDT/FTO activities.
The United States has taken a wide range of diplomatic, political, and security-related steps, in addition to economic measures such as export controls, in an effort to persuade certain countries to stop their support for terrorist activities. The methods that the United States uses against any one country, terrorist organization or individual varies, and is dictated by the specific circumstances prevailing at any given time. For example, in the case of Syria, the United States believes that maintenance of anti-terrorism controls is an appropriate way to remind Syria of its obligations to act against terrorist elements whenever it has the capability to do so.
The foreign availability provision does not apply to items determined by the Secretary of State to require control under Section 6(j) of the Act(3). Cognizant of the value of such controls in emphasizing the U.S. position toward countries supporting international terrorism, Congress specifically excluded them from foreign availability assessments otherwise required by the Act. However, the Department of Commerce has considered foreign availability of items controlled to designated terrorist countries under Section 6(a).
For Syria and Iran, there are numerous foreign sources for commodities similar to those subject to controls. Although Sudan's imports are low-technology items for which numerous foreign sources exist, the poor health of Sudan's economy -- and thus its inability to import these
goods -- makes foreign availability less of an issue. The development of Sudan's oil resources would change this perception radically, as would an end to the civil war, since these events are likely to have a positive impact on the health of Sudan's economy. For North Korea, the continued maintenance of sanctions by many other countries severely limits the impact of foreign availability.
END NOTES
1. The Department of Commerce requires a license under Section 6(a) of the Act for all computers going to Iran, North Korea, Sudan, or Syria with a CTP of 6 MTOPS or above. Note also that controls on computers apply at all levels to Cuba and Libya. For Iraq, the Department of Commerce maintains restrictions on items subject to the EAR that are also controlled by the Treasury Department, which administers a comprehensive embargo on Iraq.
2. See 15 CFR 746(c)(2)(vi and vii).
3. Provisions pertaining to foreign availability do not apply to export controls in effect before July 12, 1985, under sections 6(i) (International Obligations), 6(j) (Countries Supporting International Terrorism), and 6(n) (Crime Control Instruments). See the Export Administration Amendments Act of 1985, Public Law 99-64, section 108(g)(2), Stat.120, 134-35. Moreover, sections 6(i), 6(j), and 6(n) require that controls be implemented under certain conditions without consideration of foreign availability.