[House Document 106-255]
[From the U.S. Government Publishing Office]



106th Congress, 2d Session - - - - - - - - - - - House Document 106-255 


 
           A REPORT TO THE CONGRESS ON EXECUTIVE ORDER 12938

                                 ________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              Transmitting

A REPORT ON THE NATIONAL EMERGENCY DECLARED BY EXECUTIVE ORDER NO. 
  12938 OF NOVEMBER 14, 1994, IN RESPONSE TO THE THREAT POSED BY THE 
  PROLIFERATION OF NUCLEAR, BIOLOGICAL, AND CHEMICAL WEAPONS (``WEAPONS 
  OF MASS DESTRUCTION'') AND OF THE MEANS OF DELIVERING SUCH WEAPONS, 
  PURSUANT TO 50 U.S.C. 1703(c)




    June 14, 2000.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
79-011                     WASHINGTON : 2000

To the Congress of the United States:
    Enclosed is a report to the Congress on Executive Order 
12938, as required by section 204 of the International 
Emergency Economic Powers Act (50 U.S.C. 1703(c)) and section 
401(c) of the National Emergencies Act (50 U.S.C. 1641(c)).

                                                William J. Clinton.
    The White House, June 14, 2000.
              Report to Congress on Executive Order 12938

    On November 14, 1994, in light of the dangers of the 
proliferation of nuclear, biological, and chemical weapons 
(``weapons of mass destruction''--WMD) and of the means of 
delivering such weapons, I issued Executive Order 12938, 
declaring a national emergency under the International 
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). Under 
section 202(d) of the National Emergencies Act (50 U.S.C. 
1622(d)), the national emergency terminates on the anniversary 
date of its declaration unless, within the ninety-day period 
prior to each anniversary date, I publish in the Federal 
Register and transmit to the Congress a notice stating that 
such an emergency is to continue in effect. The proliferation 
of weapons of mass destruction and their means of delivery 
continues to pose an unusual and extraordinary threat to the 
national security, foreign policy, and economy of the United 
States. I therefore advised the Congress that the national 
emergency declared on November 14, 1994, and extended on 
November 14, 1995; November 12, 1996; November 13, 1997; and 
November 12, 1998; must continue in effect beyond November 14, 
1999. I accordingly extended the national emergency declared in 
Executive Order 12938, as amended, on November 10, 1999.
    The following report is made pursuant to Section 204(a) of 
the International Emergency Economic Powers Act (50 U.S.C. 
1703(c)) and Section 401(c) of the National Emergencies Act (50 
U.S.C. 1641(c)). It reports actions taken and expenditures 
incurred pursuant to the emergency declaration during the 
period November 1999 through April 2000. Additional information 
on nuclear, missile, and/or chemical and biological weapons 
(CBW) nonproliferation efforts is contained in the most recent 
annual Report on the Proliferation of Missiles and Essential 
Components of Nuclear, Biological and Chemical Weapons, 
provided to Congress pursuant to Section 1097 of the National 
Defense Authorization Act for Fiscal Years 1992 and 1993 
(Public Law 102-190), also known as the ``Nonproliferation 
Report,'' and the most recent annual report provided to the 
Congress pursuant to Section 308 of the Chemical and Biological 
Weapons Control and Warfare Elimination Act of 1991 (Public Law 
102-182), also known as the ``CBW Report.''
    On July 28, 1998, in E.O. 13094, I amended section 4 of 
E.O. 12938 so that the United States Government could more 
effectively respond to the worldwide threat of weapons of mass 
destruction proliferation activities. The amendment of section 
4 strengthens E.O. 12938 in several significant ways. The 
amendment broadens the type of proliferation activity that can 
subject entities to potential penalties under the Executive 
Order. The original Executive Order provided for penalties for 
contributions to the efforts of any foreign country, project or 
entity to use, acquire, design, produce or stockpile chemical 
or biological weapons; the amended Executive Order also covers 
contributions to foreign programs for nuclear weapons and for 
missiles capable of delivering weapons of mass destruction. 
Moreover, the amendment expands the original Executive Order to 
include attempts to contribute to foreign proliferation 
activities, as well as actual contributions, and broadens the 
range of potential penalties to expressly include the 
prohibition of U.S. Government assistance to foreign persons, 
and the prohibition of imports into the United States and U.S. 
Government procurement. In sum, the amendment gives the United 
States Government greater flexibility in deciding how and to 
what extent to impose measures against foreign persons that 
assist proliferation programs.
Nuclear Weapons
    In May 1998, India and Pakistan each conducted a series of 
nuclear tests. World reaction included nearly universal 
condemnation across a broad range of international fora and 
multilateral support for a broad range of sanctions, including 
new restrictions on lending by international financial 
institutions unrelated to basic human needs and on aid from the 
G-8 and other countries.
    Since the mandatory imposition of U.S. statutory sanctions, 
we have worked unilaterally, with other P-5 and G-8 members, 
with the South Asia Task Force (SATF) and through the UN to 
dissuade India and Pakistan from taking further steps toward 
developing nuclear weapons. We have urged them to join 
multilateral arms control efforts (in the near term, especially 
the Comprehensive Nuclear Test-Ban Treaty (CTBT) and the 
Fissile Material Cut-Off Treaty (FMCT); ultimately the Nuclear 
Non-Proliferation Treaty (NPT)) and to conform to the standards 
of nonproliferation export control regimes, to prevent a 
regional arms race and build confidence by practicing 
restraint, and to resume efforts to resolve their differences 
through dialogue.
    The P-5, G-8, and UN Security Council have called on India 
and Pakistan to take a broad range of concrete actions designed 
to prevent a costly and destabilizing nuclear and missile arms 
race. The United States has focused most intensely on 
severalobjectives that can be met over the short and medium term: an 
end to nuclear testing and prompt, unconditional adherence to the CTBT; 
constructive engagement in negotiations on an FMCT and, pending their 
conclusion, a moratorium on production of fissile material for nuclear 
weapons and other nuclear explosive devices; restraint in the 
development of nuclear-capable missiles and aircraft; and adoption of 
controls meeting international standards on exports of sensitive 
materials and technology.
    Against this backdrop of international pressure on India 
and Pakistan, high-level U.S. dialogues with Indian and 
Pakistani officials have yielded little progress. In September 
1998, Indian and Pakistani leaders had expressed a willingness 
to sign the CTBT. Both governments, having already declared 
testing moratoria, indicated they were prepared to sign the 
CTBT by September 1999 under certain conditions. Those 
declarations were made before the collapse of Prime Minister 
Vajpayee's Indian government in April 1999, which delayed 
consideration of CTBT signature in India. The Indian election, 
the Kargil conflict, and the October coup in Pakistan further 
complicated the issue, although neither country has renounced 
its commitment. Both governments say they are taking steps to 
build domestic consensus for CTBT signature but cannot proceed 
without this.
    India and Pakistan both withdrew their opposition to 
negotiations on an FMCT in Geneva at the end of the 1998 
Conference on Disarmament session, and negotiations got 
underway for a brief time. However, these negotiations were 
unable to resume in 1999 and neither India nor Pakistan played 
a helpful ``behind the scenes'' role. They did pledge to revise 
and strengthen their export controls to bring them into closer 
conformity with international standards on sensitive exports, 
and have begun expert discussion with the U.S. and others on 
this subject. In April 2000, India announced welcome revisions 
to its export control procedures.
    The summer 1999 Kargil conflict complicated efforts to 
continue the Indo-Pakistani bilateral dialogue begun at Lahore; 
currently there are few encouraging signs that they will re-
engage soon. We have agreed to continue regular discussions 
with India at the senior and expert levels, and will also 
remain engaged with Pakistan as appropriate. Our diplomatic 
efforts in concert with the P-5, G-8, and in international fora 
will also continue.
    I discussed these issues on my trip to India and Pakistan 
in March. In India, we stressed that the United States and 
India will not be able to reach the full potential of their new 
relationship without progress in this area. In Pakistan, we 
also emphasized the importance of progress on regional security 
and nonproliferation, among other pressing issues.
    In October 1994, the United States and the Democratic 
People's Republic of Korea (DPRK or North Korea) signed an 
Agreed Framework which, if fully implemented, will ultimately 
result in the complete cessation of the DPRK's nuclear weapons-
related program and its full compliance with the NPT. As a 
first step, North Korea froze construction and operations at 
its Yongbyon and Taechon nuclear facilities. The freeze remains 
in place and the IAEA has maintained a continuous presence at 
these sites since 1994. U.S. experts also remain on-site in 
North Korea working to complete clean up operations and have 
completed the canning, under IAEA seals, of spent fuel from the 
North's 5-megawatt nuclear reactor.
    Serious U.S. suspicions about an underground facility at 
Kumchang-ni led the U.S. to raise its concerns directly with 
Pyongyang and to negotiate access to the site. In May 1999, a 
U.S. Department of State team visited the site and judged it to 
be neither suitable for plutonium production reactors nor 
designed for reprocessing activities in its current state. 
Based on the data gathered by the United States delegation and 
the subsequent technical review, the United States has 
concluded that the activities there were not a violation of the 
Agreed Framework. The United States will conduct another visit 
to the site in the spring of 2000, and follow up visits will 
continue as long as U.S. concerns about the site remain.
    While the Kumchang-ni visit addressed some of our concerns, 
future negotiations with the North will seek to discuss ways to 
allay all of them--in the context of assuring full 
implementation of the Agreed Framework and improving overall 
relations. At the March round of US-DPRK discussions, agreement 
was reached to schedule further talks in preparation for the 
visit of a high-level North Korean to Washington, as well as 
talks related to the DPRK's missile program and Agreed 
Framework implementation.
    The Nuclear Non-Proliferation Treaty (NPT) is the 
cornerstone of the global nuclear nonproliferation regime. In 
May 1999, NPT Parties met in New York to complete preparations 
for the 2000 NPT Review Conference. The United States isworking 
with others to ensure that the 2000 NPT Review Conference is a success 
that reaffirms the NPT as a strong and viable part of the global 
security system.
    The United States signed the Comprehensive Nuclear Test Ban 
Treaty on September 24, 1996. So far, 155 countries have signed 
and 57 have ratified the CTBT. During 1999, CTBT signatories 
conducted numerous meetings of the Preparatory Commission 
(PrepCom) in Vienna, seeking to promote rapid completion of the 
International Monitoring System (IMS) established by the 
Treaty. In October 1999, a Conference was held pursuant to 
Article XIV of the CTBT, to discuss ways to accelerate the 
entry into force of the Treaty. The United States attended that 
Conference as an observer.
    On September 22, 1997, I transmitted the CTBT to the 
Senate, requesting prompt advice and consent to ratification. I 
deeply regret the Senate's decision on October 13, 1999 to 
refuse its consent to ratify the CTBT. The CTBT will serve 
several United States national security interests by 
prohibiting all nuclear explosions. It will constrain the 
development and qualitative improvement of nuclear weapons, 
make the development of advanced new types of weapons much more 
difficult, contribute to the prevention of nuclear 
proliferation and the process of nuclear disarmament, and 
strengthen international peace and security. The CTBT marks a 
historic milestone in our drive to reduce the nuclear threat 
and to build a safer world. For these reasons, we hope that at 
an appropriate time, the Senate will reconsider this treaty in 
a manner that will ensure a thorough hearing process and a 
comprehensive debate.
    The purpose of the 35-nation Nuclear Non-Proliferation 
Treaty (NPT) Exporters (Zangger) Committee is to harmonize 
implementation of NPT Article III.2 to ensure that IAEA 
safeguards are applied to exports to non-nuclear weapon states 
of (a) source or special fissionable material, or (b) equipment 
or material especially designed or prepared for the processing, 
use or production of special fissionable material. The relative 
informality of the Zangger Committee has enabled it to take the 
lead on certain nonproliferation issues that would be more 
difficult to resolve in the Nuclear Suppliers Group.
    At the March 2000 meeting, the Committee approved the 
Chairman's report of Committee activities to the 2000 NPT 
Review Conference (REVCON). The Committee also agreed to 
continue consideration of possible future adoption of a policy 
of requiring full-scope safeguards (acceptance by a nation of 
IAEA safeguards on all its nuclear facilities) as a condition 
of supply to non-nuclear weapon states. The Committee agreed to 
an informal meeting with IAEA staff to discuss procedures for 
keeping the Agency informed on Trigger List changes and the 
rationale for such changes, since the Agency uses the Zangger 
Trigger List as a reference document.
    During the past year, two new members have joined the 
Zangger Committee--Turkey in October 1999 and Slovenia in March 
2000.
    With 35 member states, the Nuclear Suppliers Group (NSG) is 
a widely accepted mature, and effective export-control 
arrangement. The NSG Guidelines go beyond the charter of the 
Zangger Committee and allow the NSG to control nuclear-related 
dual-use equipment and materials as well as technology related 
to both nuclear and dual-use equipment. The NSG has also 
established a policy of requiring non-nuclear weapon states to 
accept full scope IAEA safeguards as a condition of nuclear 
cooperation that also goes beyond the requirements of Article 
III.2 of the NPT.
    NSG membership includes all members of the Zangger 
Committee, except China, Turkey and Slovenia, plus non-Zangger 
Committee members Brazil, New Zealand and Latvia. China is the 
only major nuclear supplier that is not a member of the NSG, 
primarily because it has not accepted the NSG policy of 
requiring full-scope safeguards as a condition for supply of 
nuclear Trigger List items to non-nuclear weapon states. 
However, China has taken a major step toward harmonization of 
its export control system with the NSG Guidelines by the 
implementation of controls over nuclear-related dual-use 
equipment and technology.
    Turkey and Belarus are expected to be accepted as new NSG 
members prior to the 2000 Plenary in France. The NSG is 
considering membership requests from Cyprus and Kazakhstan.
    The 1999 NSG Plenary meeting in Florence, Italy, inter 
alia: (a) established an Implementation Working Group chaired 
by the United Kingdom to consider streamlining and 
restructuring the NSG; (b) mandated the Transparency Working 
Group to prepare a report on NSG activities for presentation at 
the 2000 NPT Review Conference by the Italian chair, and (c) 
accepted offers by France to host the 2000 Plenary and the 
United States to host the 2001 Plenary.
    In Vienna meetings during October 1999: (a) Italy chaired 
an NSG plenary meeting to confirm agreement to add to the NSG 
Trigger List the uranium and plutonium conversion equipment 
recently added to the Zangger Trigger List; (b) the 
Implementation Issues Working Group began discussion of 
restructuring proposals; and (c) the Dual Use Consultations 
considered a report from the Swedish-chaired Components Working 
Group regarding addition of components to the Dual-Use Regime 
Annex.
    During early March 2000 meetings in Vienna: (a) the 
Netherlands-chaired Transparency Working Group reached 
agreement on the report by the NSG Chair to the NPT Review 
Conference; (b) Italy chaired a meeting to review the status of 
NSG controls over intangible technology; (c) the Implementation 
Issues Working Group agreed that restructuring is needed to 
strengthen the Plenary and to eliminate the current separate 
Dual Use Regime; and (d) the Components Working Group made 
progress on a definition of controllable components.

Chemical and Biological Weapons

    The export control regulations issued under the Enhanced 
Proliferation Control Initiative (EPCI) remain fully in force 
and continue to be administered by the Department of Commerce, 
in consultation with other agencies, in order to control the 
export of items with potential use in chemical or biological 
weapons or unmanned delivery systems for weapons of mass 
destruction.
    Chemical weapons (CW) continue to pose a very serious 
threat to our security and that of our allies. On April 29, 
1997, the Convention on the Prohibition of the Development, 
Production, Stockpiling and Use of Chemical Weapons and on 
Their Destruction (the Chemical Weapons Convention or CWC) 
entered into force with 87 of the CWC's 165 States Signatories 
as original States Parties. The United States was among their 
number, having ratified the CWC on April 25, 1997. Russia 
ratified the CWC on November 5, 1997, and became a State Party 
on December 8, 1997. As of 1 May 2000, 132 countries (including 
China, Iran, India, Pakistan, and Ukraine) have become States 
Parties. Three others will become States Parties during May (30 
days after they ratified or acceded): Colombia (ratified 4/5/
00); Federal Republic of Yugoslavia (acceded 4/20/00); and 
Malaysia (ratified 4/20/00).
    The implementing body for the CWC--the Organization for the 
Prohibition of Chemical Weapons (OPCW)--was established on 
April 29, 1997. The OPCW, located in The Hague, has primary 
responsibility (along with States Parties) for implementing the 
CWC. It consists of the Conference of States Parties, the 
Executive Council (EC), and the Technical Secretariat (TS). The 
TS carries out the verification provisions of the CWC, and 
presently has a staff of approximately 500, including about 200 
inspectors trained and equipped to inspect military and 
industrial facilities throughout the world. To date, the OPCW 
has conducted over 600 routine inspections in some 35 
countries. Challenge inspections have not yet taken place. To 
date, some 200 inspections have been conducted at military 
facilities in the United States. The OPCW maintains a permanent 
inspector presence at operational U.S. CW destruction 
facilities in Utah, Johnston Island and elsewhere.
    The United States is determined to seek full implementation 
of the concrete measures in the CWC designed to raise the costs 
and risks for any state or terrorist attempting to engage in 
chemical weapons-related activities. The CWC's declaration 
requirements improve our knowledge of possible chemical weapons 
activities. Its inspection provisions provide for access to 
declared and undeclared facilities and locations, thus making 
clandestine chemical weapons production and stockpiling more 
difficult, more risky, and more expensive.
    The Chemical Weapons Convention Implementation Act of 1998 
was enacted into U.S. law in October 1998, as part of the 
Omnibus Consolidated and Emergency Supplemental Appropriation 
Act for Fiscal Year 1999 (P.L. 105-277). The Administration 
published Executive Order 13128 on June 25, 1999, to facilitate 
implementation of the Act and published regulations in December 
1999 regarding industrial declarations and inspections of 
industrial facilities. The Administration submitted Schedule 1 
and Schedule 2 industry declarations on April 28, 2000, and 
will submit all other declarations by the end of June 2000. The 
first industry inspections took place in early May. Submission 
of these declarations to the OPCW, and subsequent inspections, 
will enable the United States to be fully compliant with the 
CWC. This will strengthen United States leadership in the 
organization as well as our ability to encourage other States 
Parties to make accurate and timely declarations.
    Countries that refuse to join the CWC will be politically 
isolated and prohibited by the CWC from trading with States 
Parties in certain key chemicals. The relevant treatyprovisions 
are specifically designed to penalize countries that refuse to join the 
rest of the world in eliminating the threat of chemical weapons.
    The United States also continues to play an active role in 
the international effort to reduce the treat from biological 
weapons (BW). We actively participate in the Ad Hoc Group (AHG) 
of States Parties. The AHG strives to complete a legally 
binding protocol to strengthen the 1972 Convention on the 
Prohibition of the Development, Production and Stockpiling of 
Bacteriological (Biological) and Toxin Weapons and on Their 
Destruction (the Biological Weapons Convention or BWC), to 
promote compliance and to enhance transparency. This Ad Hoc 
Group was mandated by the September 1994 BWC Special 
Conference. The Fourth BWC Review Conference (November/December 
1996) urged the AHG to complete the protocol as soon as 
possible but no later than the next BWC Review Conference in 
2001. Work is progressing on a draft rolling text through 
discussion of national views and clarification of existing 
text. Although major differences in national views persist 
concerning such substantive areas as on-site activities, export 
controls, declarations and technical assistance provisions, the 
United States remains committed to the objective agreed to in 
the 1996 Review Conference.
    I announced in my 1998 State of the Union Address that the 
United States would take a leading role in the effort to erect 
stronger international barriers against the proliferation and 
use of BW by strengthening the BWC with a new international 
means to detect and deter cheating. The United States 
Government is working closely with industry representatives to 
obtain technical input relevant to the development of U.S. 
negotiating positions and then to reach international agreement 
on data declarations and on-site investigations.
    The United States continues to be a leading participant in 
the 30-member Australia Group (AG) chemical and biological 
weapons (CBW) nonproliferation regime. The United States 
attended the most recent annual AG Plenary Session from October 
4-8, 1999, during which the Group reaffirmed the members' 
continued collective belief in the AG's viability, importance 
and compatibility with the CWC and BWC. Members continue to 
agree that full adherence to the CWC and BWC by all governments 
will be the only way to achieve a permanent global ban on 
chemical and biological weapons, and that all states adhering 
to these Conventions must take steps to ensure that their 
national activities support these goals. At the 1999 Plenary, 
the Group continued to focus on strengthening AG export 
controls and sharing information to address the threat of CBW 
terrorism. The AG also reaffirmed its commitment to continue 
its active outreach program of briefings for non-AG countries, 
and to promote regional consultations on export controls and 
nonproliferation to further awareness and understanding of 
national policies in these areas. The AG discussed ways to be 
more proactive in stemming attacks on the AG in the CWC and BWC 
contexts.
    During the last six months, we continued to examine closely 
intelligence and other reports of trade in CBW-related material 
and technology that might be relevant to sanctions provisions 
under the Chemical and Biological Weapons Control and Warfare 
Elimination Act of 1991. No new sanctions determinations were 
reached during this reporting period. The United States also 
continues to cooperate with its AG partners and other countries 
in stopping shipments of proliferation concern.

Missiles for Delivery of Weapons of Mass Destruction

    The United States continues carefully to control exports 
that could contribute to unmanned delivery systems for weapons 
of mass destruction, and closely to monitor activities of 
potential missile proliferation concern. We also continue to 
implement U.S. missile sanctions laws. In April 2000 we imposed 
sanctions against a North Korean entity and four Iranian 
entities for missile proliferation activities. These sanctions 
followed March 1999 missile sanctions against three Middle 
Eastern entities.
    During this reporting period, Missile Technology Control 
Regime (MTCR) Partners continued to share information about 
proliferation problems with each other and with other potential 
supplier, consumer, and transshipment states. Partners also 
emphasized the need for implementing effective export control 
systems. This cooperation has resulted in the interdiction of 
missile-related materials intended for use in missile programs 
of concern.
    In March the United States participated in the MTCR's 
Reinforced Point of Contact Meeting (RPOC). At the RPOC, MTCR 
Partners held in depth discussions on various proposals for 
better addressing the global missile proliferation threat.
    During this reporting period, the United States continued 
to work unilaterally and in coordination with its MTCR 
Partnersto combat missile proliferation and to encourage nonmembers to 
export responsibility and to adhere to the MTCR Guidelines. Since my 
last report, we continued our missile nonproliferation dialogues with 
China, India, the Republic of Korea (ROK), and North Korea (DPRK). 
Regular discussions with Pakistan at the senior and expert levels have 
not proceeded since the coup. However, we have remained engaged at the 
diplomatic level and I addressed our nonproliferation concerns during 
my visit to Pakistan in March. In the course of normal diplomatic 
relations we also have pursued such discussions with other countries in 
Central Europe, South Asia and the Middle East.
    In March 1999, the United States and the DPRK held a fourth 
round of missile talks. We stated our strong opposition to 
North Korea's destabilizing missile development and export 
activities and pressed for tight constraints on DPRK missile 
development, testing and exports. We affirmed that the United 
States viewed further launches of long-range missiles and 
transfers of long-range missiles or technology for such 
missiles as direct threats to U.S. allies and ultimately to the 
United States itself. We subsequently reiterated that message 
at every available opportunity. In particular, we reminded the 
DPRK of the consequences of another rocket launch and 
encouraged it not to take such action. We also urged the DPRK 
to take steps towards building a constructive bilateral 
relationship with the United States.
    These efforts resulted in an important first step. Since 
September 1999, it has been our understanding that the DPRK 
will refrain from testing long-range missiles of any kind 
during our discussions to improve relations. In recognition of 
this DPRK step, the U.S. has announced the intention to ease 
certain sanctions related to the import and export of many 
consumer goods.
    In response to reports of continuing Iranian efforts to 
acquire sensitive items from Russian entities for use in Iran's 
missile and nuclear development programs, the United States 
pursued high-level dialogue with Russia aimed at finding ways 
to work together to cut off the flow of sensitive goods to 
Iran's ballistic missile development program. During this 
reporting period, Russia's government created institutional 
foundations to implement a newly enacted nonproliferation 
policy and passed laws to punish wrongdoers. It also passed new 
export control legislation to tighten government control over 
sensitive technologies and began working with the United States 
to strengthen export control practices at Russian aerospace 
firms. However, despite the Russian government's 
nonproliferation and export control efforts, some Russian 
entities continued to cooperate with Iran's ballistic missile 
program and to engage in nuclear cooperation with Iran beyond 
the Bushehr Unit 1 nuclear power reactor project.
    Consistent with the Russian Government's April 1999 
announcement of administrative action against the Rector of 
Baltic State Technical University (BSTU) for his involvement in 
training Iranian specialists at BSTU, and following our own 
assessment, the United States announced on April 24, 2000, that 
it intends to impose trade and administrative penalties on the 
rector for his involvement with the Iranian missile program. At 
the same time, the United States also announced its intention 
to remove restrictions imposed in July 1998 on two Russian 
entities--INOR and Polyus--which have ceased the proliferant 
behavior that led to the imposition of penalties. However, 
trade penalties imposed in July 1998 against five other Russian 
entities and in January 1999 against three additional entities 
remain in effect.

Value of Nonproliferation Export Controls

    U.S. national export controls--both those implemented 
pursuant to multilateral nonproliferation regimes and those 
implemented unilaterally--play an important part in impeding 
the proliferation of WMD and missiles. (As used here ``export 
controls'' refer to requirements for case-by-case review of 
certain exports, or limitations on exports of particular items 
of proliferation concern to certain destinations, rather than 
broad embargoes or economic sanctions that also affect trade.) 
As noted in this report, however, export controls are only one 
of a number of tools the U.S. uses to achieve its 
nonproliferation objectives. Global nonproliferation norms, 
informal multilateral regimes, interdictions of shipments of 
proliferation concern, sanctions, export control assistance, 
redirection and elimination efforts, and robust U.S. military, 
intelligence, and diplomatic capabilities all work in 
conjunction with export controls as part of our overall 
nonproliferation strategy.
    Export controls are a critical part of nonproliferation 
because every proliferant WMD/missile program seeks equipment 
and technology from other countries. Proliferators look to 
other sources because needed items are unavailable within 
country, because indigenously produced items are of substandard 
quality or insufficient quantity, and/or because imported items 
can be operated more quickly and cheaply than domestically 
produced ones. It is important to note that proliferators 
seekfor their programs both items on multilateral lists (like 
gyroscopes controlled on the MTCR Annex and nerve gas ingredients on 
the Australia Group list) and unlisted items (like lower-level machine 
tools and very basic chemicals). In addition, many of the items of 
interest to proliferators are inherently dual-use. For example, key 
ingredients and technologies used in the production of fertilizers and 
pesticides also can be used to make chemical weapons; bio-production 
technology can be used to produce biological weapons.
    The most obvious value of export controls is in impeding or 
even denying proliferators access to key pieces of equipment or 
technology for use in their WMD/missile programs. In large 
part, U.S. national export controls--and similar controls of 
our partners in the Australia Group, Missile Technology Control 
Regime, and Nuclear Suppliers Group--have denied proliferators 
access to the largest sources of the best equipment and 
technology. Proliferators have mostly been forced to seek less 
capable items from nonregime suppliers. Moreover, in many 
instances, U.S. and regime controls and associated efforts have 
forced proliferators to engage in complex clandestine 
procurements even from nonmember suppliers, taking time and 
money away from WMD/missile programs.
    U.S. national export controls and those of our regime 
partners also have played an important leadership role, 
increasing over time the critical mass of countries applying 
nonproliferation export controls. For example, progress on the 
following would have been impossible without the leadership 
shown by U.S. willingness to be the first to apply controls: 
the seven-member MTCR of 1987 has grown to 32 member countries; 
several nonmember countries have committed unilaterally to 
apply export controls consistent with one or more of the 
regimes; and most of the members of the nonproliferation 
regimes have applied national ``catch all'' controls similar to 
those under the U.S. Enhanced Proliferation Control Initiative. 
(Export controls normally are tied to a specific list of items, 
such as the MTCR Annex. ``Catch all'' controls provide a legal 
basis to control exports of items not on a list, when those 
items are destined for WMD/missile programs.)
    U.S. export controls, especially ``catch all'' controls, 
also make important political and moral contributions to the 
nonproliferation effort. They uphold the broad legal 
obligations the United States has undertaken in the Nuclear 
Nonproliferation Treaty (Article I), Biological Weapons 
Convention (Article III), and Chemical Weapons Convention 
(Article I) not to assist anyone in proscribed WMD activities. 
They endeavor to assure there are no U.S. ``fingerprints'' on 
WMD and missiles that threaten U.S. citizens and territory and 
our friends and interests overseas. They place the United 
States squarely and unambiguously against WMD/missile 
proliferation, even against the prospect of inadvertent 
proliferation from the United States itself.
    Finally, export controls play an important role in enabling 
and enhancing legitimate trade. They provide a means to permit 
dual-use export to proceed under circumstances where, without 
export control scrutiny, the only prudent course would be to 
prohibit them. They help build confidence between countries 
applying similar controls that, in turn, results in increased 
trade. Each of the WMD nonproliferation regimes, for example, 
has a ``no undercut'' policy committing each member not to make 
an export that another has denied for nonproliferation reasons 
and notified to the rest--unless it first consults with the 
original denying country. Not only does this policy make it 
more difficult for proliferators to get items from regime 
members, it establishes a ``level playing field'' for 
exporters.

Threat Reduction

    The potential for proliferation of WMD and delivery system 
expertise has increased in part as a consequence of the 
economic crisis in Russia and other NIS. The Administration 
gives high priority to controlling the human dimension of 
proliferation through programs that support the transition of 
former Soviet weapons scientists to civilian research and 
technology development activities. I have proposed an 
additional $4.5 billion for programs embodied in the Expanded 
Threat Reduction Initiative (ETRI) that would support 
activities in four areas over FYs 2000-2004; nuclear security; 
non-nuclear WMD; science and technology nonproliferation; and 
military relocation, stabilization and other security 
cooperation programs. Of the $1 billion Congressional ETRI 
request for FY 2000, an estimated $888 million is available: 
State ($182 million), Energy ($293 million) and Defense ($467 
million). We are seeking $974 million in FY2001.

Expenses

    Pursuant to Section 401(c) of the National Emergencies Act 
(50 U.S.C. 1641(c)), I report that there were no specific 
expenses directly attributable to the exercise of authorities 
conferred by the declaration of the national emergency in 
Executive Order 12938, as amended, during the period from 
November 14, 1999 through May 15, 2000.

                                  
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