Where Industry and Security Intersect
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The Office of Strategic Trade & Foreign Policy Controls (STFPC) is composed of three divisions: Strategic Trade; Foreign Policy; and Information Technology Controls. STFPC implements multilateral export controls for national security reasons to comply with the Wassenaar Arrangement to control the spread of dual-use goods and related technologies. STFPC is also responsible for U.S. compliance with the bilateral agreement with Japan prescribing export controls for high-performance computers. In addition, the office implements U.S. foreign policy controls to ensure that exports are consistent with our national goals relating to human rights, crime control, antiterrorism, and regional stability, and the office is responsible for all consequent policy actions, export licenses, commodity classifications, and advisory opinions for affected commodities. STFPC also represents the Department in international negotiations on export controls and control list development.
The United States maintains national security controls on the export and re-export of strategic commodities and technical data worldwide to prevent the diversion of such strategic items to certain destinations. To achieve this objective, the United States attempts to pursue a multilateral approach and imposes controls in cooperation with other nations participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.
The Wassenaar Arrangement is a multilateral regime currently consisting of 33 member countries. It contributes to regional and international security and stability by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations of these commodities. The agreement obligates member countries to exchange information on certain dual-use transfer approvals and denials. The members share this information to enhance international security and regional stability.
In February 1999, BXA added to its Web site a Web page dedicated to the Wassenaar Arrangement and related BXA developments, intended to serve as a resource to exporters.
The United States continues to participate in submissions of export data made by member countries in the regime since the November 1996 implementation of Wassenaar. Wassenaar members make dual-use data submissions on a semiannual basis in April and October.
The Wassenaar Arrangement's Initial Elements called for Participating States to assess the overall functioning of this arrangement. The first review process , in 1999, provided an opportunity to focus on how the arrangement is meeting its objectives. Two assessment meetings were held in February and May. The U.S. objectives for the 1999 Assessment included: (1) Expanded reporting of conventional arms; (2) Strengthening the Wassenaar Arrangement rule by adopting a denial notification policy similar to the nonproliferation regimes; and (3) Implementing controls on man-portable defense systems (MANPADS). The Wassenaar Arrangement also continues annual reviews of its control lists.
In July 1999, BXA participated in an informal meeting among 25 Wassenaar Arrangement countries to discuss enhancing controls for intangible transfers of technology and software. Further discussion on establishing effective controls for intangible transfers among all Wassenaar members will continue in the fall.
National Security Export Control Changes
In July 1999, BXA published changes to the EAR to implement in the Commerce
Control List (CCL) changes agree to in 1998 to the Wassenaar Arrangement's
List of Dual-Use Goods and Technologies. Changes in the July 1999 regulation
streamlined controls for telecommunications equipment and technology, consistent
with the agreed relaxations in Wassenaar. This July 1999 rule also liberalized
controls for ion implanters and relaxed controls on the minimum resolvable
feature size of lithography equipment from 0.7 to 0.5 microns.
In 1999, to reflect technological advances, BXA raised License Exception CIV's eligibility level for microprocessors from 500 MTOPS to 1,200 MTOPS in January and to 1,900 MTOPS in July.
In December 1998, the Wassenaar members agreed to move encryption items from the Sensitive List to the Basic List and make other revisions to encryption controls. Wassenaar's December 3 agreement was the result of a two-year effort to modernize and improve multilateral export controls on encryption. That agreement simplified export controls on many encryption products. For example, the December 3 agreement created a positive list of controlled encryption. In the past, the Wassenaar Arrangement required participating countries to control all encryption products without regard to encryption strength. Now, the new list clearly states that products with an encryption key length of 56 bits or less are no longer controlled.
Wassenaar member countries also agreed that the General Software Note (GSN) should not apply to encryption. It was replaced with a new cryptography note. The GSN allowed countries to export mass-market encryption software without limits on the key length. It was essential to close loopholes that permitted the uncontrolled export of encryption with unlimited key length; accordingly, the agreement established a key length of 64-bits or less as an appropriate threshold. The agreement also extended liberalized mass-market treatment to hardware encryption products. Previously, only mass-market software enjoyed this liberalized treatment.
The December 3 agreement also eliminated requirements to report exports of encryption products, and removed controls on certain consumer electronic items such as DVD products and cordless telephone systems designed for home or office use.
The United States also updated its own export controls on encryption. On December 31, 1998, the Commerce Department amended the EAR to implement the encryption policy changes the Administration announced on September 16, 1998.
On September 16, 1999, the Administration announced a new approach to encryption policy that simplified export controls. This approach comprises three elements: information security and privacy, a new framework for export controls, and updated tools for law enforcement. The element of encryption export control rests on three principles: a one-time technical review in advance of sale; a streamlined post-export reporting system; and a process that permits the government to review the exports of strong encryption to foreign government and military organizations and to nations of concern. The regulations implementing the changes are expected to be published by January 14, 2000.
The new guidelines will allow U.S. companies to export encryption hardware or software products to non-government end-users anywhere in the world except the terrorist and embargoed states, following classification by BXA. The new guidelines will relax controls on encryption products sold through retail outlets or over the Internet for consumer use. These "retail" products will be eligible for export worldwide to any end user except in the embargoed and terrorist states, including foreign governments. Internet service providers and telecommunication companies may provide services for any products to the appropriate customers.
The announcement also permits encryption technology to be eligible for export to foreign nationals working for U.S. firms under a license exception after classification. This extends the policy adopted last year, which allowed the export of encryption technology to foreign nationals working at foreign subsidiaries of United States firms under a license exception. Finally, as part of this announcement, the U.S. will harmonize encryption controls with those of other Wassenaar members by implementing the proposals agreed to in December 1998. This includes decontrolling 56-bit products, including chips, components, and toolkits, and raising the mass market threshold to 64-bit products that meet the new Wassenaar cryptographic note. Licenses will still be required to export encryption technology and to export most encryption to foreign government entities. Additionally, reporting on certain encryption exports, whether authorized under a license or license exception, will be required.
On July 1, 1999, President Clinton unveiled new export controls on HPCs and semiconductors. This new policy includes changes critical to maintaining the strong, vibrant high-technology industry, which is critical to America's national security interests. The revised controls announced by the President maintain the four country groups announced in 1995, but amend the the list of countries in, and control levels applying to three of those groups. At the same time, the President committed the Administration to review HPC export control policy every six months in order to ensure a realistic export control regime in this rapidly changing high-technology industry. Following this announcement, on July 23, 1999, the President notified Congress, pursuant to the National Defense Authorization Act for Fiscal Year 1998, of his decision to establish a new threshold performance level to which the notification procedure for computers will apply.
On August 3, 1999, the regulation implementing the President's announcement was published. It moved Brazil, the Czech Republic, Hungary, and Poland from Country Tier II to Tier I, thus allowing a license exception for all computer exports to those countries. It raised the control level for Tier II countries from 10,000 to 20,000 MTOPS with the expectation that it will be raised again in six months to the 32,000-36,000 MTOPS range. It maintained the distinction between civilian and military end-users in Tier III countries. T license level for Tier III civilian end-users was immediately raised from 7,000 to 12,300 MTOPS. The license level for Tier III military end-users was retained at 2,000 MTOPS until the conclusion of the six-month Congressional review mandated by the NDAA, at which time it will be raised to 6,500 MTOPS. Proliferation end-users will still require a license for any HPC export. The denial policy for Tier IV countries remains unchanged.
Section 5(b) of the Export Administration Act of 1979, as amended (the Act), requires the President to establish a list of controlled countries for national security purposes. Executive Order 12214 (May 2, 1980) delegated this authority to the Secretary of Commerce. Initially, this list comprised those countries named in Section 620(f) of the Foreign Assistance Act of 1961 (FAA) (22 U.S.C. sec. 2370 (f)) at the time of the enactment of the Export Administration Act in 1979. The Secretary of Commerce, however, may add to or remove countries from the list of controlled countries under criteria provided in Section 5(b). Since 1980, the Secretary has removed from the list of controlled countries the former Federal Republic of Yugoslavia in 1985, Hungary in 1992, and the Czech Republic, Poland, and the Slovak Republic in 1994. Public Law 102-511 (October 24, 1992) amended Section 620(f) of the FAA to delete the former Soviet Bloc countries and certain other nations from the list of Communist countries. Under Section 5(b) of the Act, the United States, however, continues to control exports to some of the countries deleted from the list in Section 620(f) of the FAA.
The countries currently controlled under Section 5(b) are: Albania, Bulgaria, Cuba, Estonia, Latvia, Lithuania, Mongolia, the Newly Independent States of the former Soviet Union, North Korea, the People's Republic of China, Romania, Vietnam, and Tibet. The Department, along with other agencies, provides technical export control development assistance to many of these countries with a view to removing additional nations from the list of Section 5 (b) controlled countries under section 5 (b).
On July 4, 1999, the President issued Executive Order 13129, which prohibits all exports from the United States and by U.S. persons to the territory of Afghanistan controlled by Taliban. The Department of The Treasury's Office of Foreign Assets Control is implementing the Order. Commerce has export licensing authority for all of Afghanistan. Commerce coordinates actions with other agencies regarding the Taliban and has sole licensing responsibility for areas of Afghanistan not controlled by the Taliban.
On August 12, 1999, the United States implemented the 1997 and 1998 United Nations sanctions that expanded export controls and other sanctions against the National Union for the Total Independence of Angola (UNITA) and the territory of Angola controlled by UNITA. The Department of The Treasury's Office of Foreign Assets Control has the licensing responsibility for the specific categories of items such as arms, aircraft, petroleum, mining equipment and certain vehicles controlled to UNITA and the rest of Angola.
At the 12th annual Joint (U.S. and China) Commission on Commerce and Trade meeting in Washington, D.C., in December 1998, the United States and China agreed to procedures for end-use visits, to the expansion of Chinese end-user certificates for nonproliferation-controlled items, and to technical exchanges in 1999. The first technical exchange seminar took place in September 1999 in Washington, D.C. The Chinese participants met with BXA licensing officials to review and discuss licensing processes and policies. They also met with representatives from the Departments of Defense, Energy, and State.
Because the United States has maintained an embargo on Cuba since 1962, the export and re-export of virtually all U.S.-origin commodities, technology, and software to Cuba requires a license. On March 20, 1998, however, the President announced that the United States would take a number of steps to expand the flow of humanitarian assistance to the Cuban people to help strengthen its civil society. On May 13, 1998, the United States implemented the measures by lifting the 1996 ban on direct humanitarian flights to Cuba, streamlining procedures for the sale of medicines and medical equipment to Cuba, and allowing family remittances of specified amounts to close relatives in Cuba.
On January 5, 1999, the President announced the authorization of licensed sales to Cuba of food and certain other agricultural items (seeds, fertilizer, pesticides). The President authorized sales to individuals and organizations independent of the Cuban government. By focusing on the private farming sector, this new program was consistent with the United State's objective to promote a transition to a free and independent Cuba.
Federal Republic of Yugoslavia (FRY) (Serbia and Montenegro)
In 1998, the Department imposed new foreign policy controls on the Federal
Republic of Yugoslavia (also known as the FRY or Serbia/Montenegro), in concert
with the Department of State. Implementing the United Nations Security Council
Resolution 1160 of March 31, 1998, these controls prohibit the sale or supply
of certain arms-related items and the transport by U.S.-registered aircraft
and vessels of such items to the FRY.
On April 30, 1999, the President issued Executive Order 13121, which embargoed all trade with the FRY. On May 4, 1999, the United States published in the Federal Register an amendment to the EAR requiring a license for all exports and re-exports to Serbia, including petroleum products with a presumption that all license applications would be denied except those for basic humanitarian items. With the end of the NATO bombing campaign, the United States has modified its Serbia sanctions to exempt the province of Kosovo from the comprehensive economic sanctions imposed on Serbia. The "carve out" is intended to aid NATO forces in Kosovo and make the widest possible range of goods available to the Kosovars without undue delay.
Under the Hong Kong Policy Act of 1992, the United States Government will continue its export licensing treatment that was in effect before China regained control, for so long as long as Hong Kong maintains an effective and autonomous export control program. The Bureau of Export Administration aggressively monitors the status of Hong Kong's post-reversion export control program to ensure that it continues to be effective and autonomous from that of the People's Republic of China. By openly and vigilantly observing Hong Kong's program, BXA supports Hong Kong's efforts to maintain the separation of its export control system from that of the rest of China.
Under an Agreed Minute on Strategic Commodities Trade Controls signed by Secretary Daley and his Hong Kong counterpart in October 1997, the two agencies hold semiannual meetings to exchange information and enhance cooperation. These meetings assist BXA in monitoring Hong Kong's export controls to determine whether its system continues to be effective and autonomous. In February 1999, BXA led an interagency delegation to Hong Kong to discuss export control and enforcement issues with Hong Kong officials. In July 1999, Hong Kong Department of Trade Deputy Director-General Edward Yau led a Hong Kong delegation to Washington for a reciprocal visit. During the meeting, BXA informed Hong Kong officials of U.S. concerns regarding border crossings by People's Liberation Army (PLA) vehicles and the results of post-shipment checks conducted in Hong Kong. Hong Kong officials explained their Customs procedures for border crossings by PLA vehicles and agreed to review their controls on items imported to Hong Kong that the United States controls unilaterally.
Under a regulation published on November 19, 1998, the United States implemented economic sanctions on India by imposing a policy of denial for the export or re-export of United States origin items controlled for nuclear non-proliferation and missile technology reasons to India and Pakistan as stated in part 742 of the EAR. Prior to the sanctions, the United States reviewed applications for these items on a case-by-case basis with a presumption of approval.
In November 1998, BXA participated in a United States delegation to India and Pakistan, whose goal was to urge India and Pakistan to adopt the multilateral non-proliferation guidelines and export control lists of the various international nonproliferation regimes. The meetings were largely informational with the United States explaining the various regime controls. Both countries expressed their commitment to nonproliferation, but stated that their governments were not anxious to join the international regimes, which they consider discriminatory. In March 1999, BXA again participated in export control talks with Indian and Pakistani officials. The U.S. goal was to determine what steps each country had taken to strengthen its export control; to encourage the adoption of the multilateral control lists; and to urge each country to adopt controls on intangible exports of technology. Pakistan clarified certain aspects of its missile controls and agreed to consider U.S. recommendations on controlling production equipment and technology. India planned to review its export control policies for nuclear and missile-related items.
On May 28, the United States published a rule in the Federal Register that added Macau to the EAR as a distinct destination on the Commerce Country Chart for export licensing purposes in preparation for the colony's return to the sovereignty of the People's Republic of China on December 20, 1999. The new regulation imposed treatment on Macau similar to that the United States accords China, but it will allow the United States to treat Macau differently from the way the PRC as conditions and circumstances warrant.
Although the United States has an embargo against North Korea, BXA, in cooperation with the Department of State, has authorized certain exports of humanitarian aid to famine and flood victims in North Korea. A 300,000 metric ton donation from the United States was the first United States Government food shipment to North Korea in 1998, fulfilling the first part of the U.S. goal to support humanitarian efforts for famine relief.
On September 17, 1999, the President announced his decision to ease sanctions against North Korea administered under the Trading with the Enemy Act, the Defense Production Act, and the EAR. The United States plans to permit the export and re-export of many nonsensitive goods and services and the transport of approved cargoes to and from North Korea by U.S. commercial ships and aircraft, subject to normal regulatory requirements. Nonproliferation restrictions associated with North Korea's designation as a terrorist-supporting state will remain in place.
On September 16, 1999, BXA revised the EAR to reflect the license review policy for the export and reexport of certain aircraft parts and components to Syria to ensure safety of flight for civilian passenger aircraft. The United States reviews license applications on a case-by-case basis with a presumption of approval, consistent with the United States Government's commitment to safety of civil aviation. We will continue to maintain the general policy of denial for the export or re-export of aircraft parts and components to Syria destined for non-civilian end-uses or end-users.
On September 13, 1999, BXA reinstated provisions of license exception AVS for temporary reexports to Libya of foreign registered aircraft subject to the EAR. This action was taken in response to the suspension of sanctions on Libya by the United Nations Security Council on April 5, 1999. Foreign registered aircraft meeting all the temporary sojourn requirements of license exception AVS may fly from foreign countries to Libya without prior written authorization from BXA.
In March 1999, BXA officials attended the Asian Export Control Seminar in Tokyo. Sponsored by Japan, the United States, and Australia, the conference was attended by representatives of 14 Asian governments. Laos and Burma participated for the first time. The purpose of the annual seminar is to provide information on export controls to Asian governments, some of which have just begun to develop comprehensive systems. Seminar participants were particularly interested in transhipment issues and in the development of internal compliance programs for industry.
In September 1999, BXA led a United States delegation to a Conference on Export Controls in Oxford, England. Participants met to consider the status of the global export control system, assess efforts to assist the nations of the former Soviet Union and Central Europe to establish and strengthen national export control programs, and develop recommendations for strengthening the global export control system.
The Administration continued to work with interested parties toward achieving meaningful sanctions reform. The Administration remains committed to a sanctions policy that is carefully targeted, truly advances our foreign policy goals, and avoids damaging other United States interests. BXA has participated in Departmental and interagency working groups looking at sanction reforms, reviewing legislation and developing proposals to rationalize the sanctions process.
On April 28, 1999, the President announced that the United States would exempt commercial sales of food, medicine, and medical equipment from future unilateral economic sanctions regimes where it had the authority to do so and would apply that policy immediately, with appropriate safeguards, to currently embargoed countries. BXA assisted in developing the list of items that may be approved under this policy. On August 2, 1999, the Department of Treasury's Office of Foreign Assets Control issued regulations amending the sanctions regimes for Iran, Libya, and Sudan to implement this policy change. Existing BXA regulations already permit approval of such exports to Cuba, North Korea, and Syria. The U.N. "Oil for Food" program permits approval of such exports to Iraq.
In 1999, the United States modified its controls on certain Crime Control items to prevent and combat the illicit transnational traffic in firearms and ammunition. On April 13, 1999, BXA imposed an import certificate (IC) requirement for the export or re-export of shotguns and for shells, and optical sighting devices for shotguns to member countries of the Organization of American States, including Canada. In 1998, the President announced at the Santiago Summit that the United States would promulgate these regulations based on the OAS Model Regulations for the Control of the International Movement of Firearms, their Parts and Components and Ammunition. The OAS members agreed to impose an import and export license requirement to effectively combat illicit manufacturing of and trafficking in firearms.
Go to Chapter Four
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.