[House Document 107-229]
[From the U.S. Government Publishing Office]



107th Congress, 2d Session - - - - - - - - - - - House Document 107-229 


 
   EMERGENCY REGARDING PROLIFERATION OF WEAPONS OF MASS DESTRUCTION

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A 6-MONTH PERIODIC REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO THE 
  PROLIFERATION OF WEAPONS OF MASS DESTRUCTION THAT WAS DECLARED IN 
  EXECUTIVE ORDER 12938 OF NOVEMBER 14, 1994, PURSUANT TO 50 U.S.C. 
  1703(c) AND 50 U.S.C. 1641(c)




    June 19, 2002.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed
                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
99-011                    WASHINGTON : 2002


To the Congress of the United States:
    As required by section 204(c) 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), I 
transmit herewith a 6-month periodic report prepared by my 
Administration on the national emergency with respect to the 
proliferation of weapons of mass destruction that was declared 
in Executive Order 12938 of November 14, 1994.

                                                    George W. Bush.
    The White House, June 18, 2002.
Report to Congress on the Emergency Regarding Proliferation of Weapons 
                          of Mass Destruction

    Weapons of mass destruction (WMD)--nuclear chemical, and 
biological weapons--and their missile delivery systems are 
among the top threats to U.S. security in the post-Cold War 
world. In the hands of countries like those on the U.S. list of 
terrorist-supporting states, these weapons would pose direct 
threats to the United States and its forces, friends, and 
allies. Some of these rogue states are already working on 
intercontinental-range missiles that would be able to deliver 
WMD against our territory directly.
    This Administration has given high priority to dealing the 
threat of WMD and missile proliferation. The September 11 
terrorist attacks in New York and Washington and subsequent 
anthrax crimes reinforce the importance of efforts to prevent 
the proliferation of these weapons, especially to terrorists 
and countries that harbor terrorists. This report describes WMD 
and missile nonproliferation measures undertaken by the United 
States between November 2001 and May 2002.
    To address the dangers posed by the proliferation of WMD 
and their delivery systems, on November 14, 1994, former 
President Clinton issued Executive Order No. 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, the President publishes a Continuation of Emergency 
Regarding Weapons of Mass Destruction in the Federal Register 
and transmits the notice to the Congress. The national 
emergency was extended on November 14, 1995; November 12, 1996; 
November 13, 1997; November 12, 1998; November 10, 1999; 
November 12, 2000; and November 9, 2001.
    The following report is made pursuant to Section 204(c) 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 12, 2001 through May 15, 2002.
    Additional information on nuclear, missile, and/or chemical 
and biological weapons (CBW) nonproliferation efforts may be 
found in the following reports: (a) 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;'' (b) the most recent semi-annual Report to Congress on 
the Acquisition of Technology Relating to Weapons of Mass 
Destruction and Advanced Conventional Munitions, provided to 
Congress pursuant to Section 721 of the Intelligence 
Authorization Act for Fiscal Year 1997; (c) the most recent 
annual report entitled ``Adherence to and Compliance with Arms 
Control Agreements'', provided pursuant to section 403 of the 
Arms Control and Disarmament Act, 22 U.S.C. 2593a; (d) the most 
recent report on the Democratic People's Republic of Korea, 
provided pursuant to Section 585 of the Foreign Operations, 
Export, Financing, and Related Programs Appropriations Act of 
1997 (Public Law 104-208); (e) the most recent Report on 
Nuclear Nonproliferation Policy in South Asia, provided 
pursuant to Public Law 102-391, Section 585; (f) the most 
recent Report on Regional Nonproliferation in South Asia, 
submitted pursuant to Section 620F(c) of Foreign Assistance 
Act; (g) the most recent Nuclear Nonproliferation Report, known 
as the ``Section 601 Report,'' submitted pursuant to Section 
601 of the Nuclear Nonproliferation Act of 1978 (Public Law 95-
242), as amended by the Nuclear Proliferation Prevention Act of 
1994; (h) the most recent semiannual report on Proliferation-
Related Transfers to Iran, submitted pursuant to Iran 
Nonproliferation Act of 2000; (i) the most recent report on 
Iran-Iraq Arms Non-Proliferation Sanctions, submitted pursuant 
to the Iran-Iraq Non-Proliferation Act of 1992, sections 1604-
1608; and (j) the most recent report on Libya sanctions, 
provided pursuant to Iran and Libya Sanctions Act of 1996 
(ILSA), section 5(b).

                            NUCLEAR WEAPONS

    Nuclear Non-Proliferation Treaty: The Treaty on the Non-
Proliferation of Nuclear Weapons (NPT) is the cornerstone of 
the global effort to halt nuclear proliferation. The first 
meeting of the Preparatory Committee (PrepCom) for the 2005 NPT 
Review Conference (RevCon) took place April 8-19, 2002, at UN 
headquarters in New York. This meeting was preceded by 
extensive consultations among key NPT parties and the 
designated Chairman of the PrepCom, Ambassador Henrik Salander 
of Sweden.
    The PrepCom completed its work successfully by issuing the 
Chairman's report--a factual summary for transmission to 
PrepCom II, which will take place in Geneva from April 28-May 
9, 2003, under the Chairmanship of Hungarian Ambassador Laszlo 
Molnar. The PrepCom also decided that PrepCom III and the 2005 
NPT RevCon will be held in New York, and that representatives 
from the Nonaligned Movement (NAM) will chair PrepCom III and 
preside over the 2005 RevCon.
    On substantive issues, the participants agreed that 
preserving and strengthening the NPT is vital to peace and 
security. They expressed strong support for International 
Atomic Energy Agency (IAEA) safeguards. Many nations cited 
September 11 as reinforcing the need to strengthen measures 
against terrorist acquisition of nuclear material. India and 
Pakistan were urged to exercise restraint and to join the NPT 
as non-nuclear-weapon states. Many states expressed concern 
about NPT compliance by Iraq and North Korea. Israel's nuclear 
program was highlighted by other Middle East states. Some U.S. 
nuclear policies were criticized, but many states welcomed 
U.S.-Russian efforts to reduce nuclear weapons.
    International Atomic Energy Agency: The International 
Atomic Energy Agency (IAEA), inter alia, verifies the 
compliance of non-nuclear weapons states (NNWS) with their NPT 
safeguards obligations. The IAEA safeguards system helps deter 
diversion of nuclear materials and provides the means to detect 
such diversions in a timely manner should any occur. During 
this reporting period, the United States continued to provide 
significant technical and financial resources to the IAEA to 
support its safeguards activities.
    The discovery of Iraq's extensive covert nuclear activities 
led to strengthening the IAEA safeguards system's ability to 
detect undeclared nuclear material and activities. The United 
States and a large number of like-minded states negotiated in 
the mid-1990s substantial safeguards strengthening measures, 
including the use of environmental sampling techniques, 
expansion of the information on nuclear activities which states 
are required to declare, and expansion of IAEA access rights. 
Those measures requiring additional legal authority are 
embodied in a Model Additional Protocol, approved in 1997. With 
these tools, the IAEA's capability to address a state's 
undeclared nuclear activities has been substantially enhanced. 
This Protocol has now been signed by 61 states and has entered 
into force for 24 countries.
    On May 9, 2002, the President submitted the U.S.-IAEA 
Additional Protocol to the Senate for advice and consent to 
ratification. In doing so, he emphasized that entry into force 
of the U.S.-IAEA Additional Protocol will bolster U.S. efforts 
to strengthen nuclear safeguards and promote the 
nonproliferation of nuclear weapons, which is a cornerstone of 
U.S. foreign and national security policy.
    During the March 18-21, 2002 IAEA Board of Governors 
Meeting, the Director General presented his statement proposing 
Agency activities relevant to preventing acts of terrorism 
involving nuclear materials and other radioactive materials, 
with a view to strengthening the Agency's work in this area. 
The Board of Governors approved funding for such activities 
through voluntary contributions, as well as approved, in 
principle, the proposals advanced by the Director General for 
further enhancing nuclear security. A number of member states 
pledged specific sums of money in support of Agency activities, 
while others expressed hope to be able to provide financial 
and/or other support in the near future. Additionally, the 
Board also recognized that the IAEA's program for technical 
cooperation assistance could be important for implementing some 
of these activities. The Agency will report to the Board 
periodically on the progress made in implementing this 
proposal.
    Zangger Committee: The purpose of the 35-nation NPT 
Exporters (Zangger) Committee (ZC) is to harmonize 
implementation of the NPT's requirement to apply IAEA 
safeguards to nuclear exports. Article III.2 of the Treaty 
requires parties 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 ZC maintains and updates a 
list of equipment and materials that may only be exported if 
safeguards are applied to the recipient facility (called the 
``Trigger List'' because such exports trigger the requirement 
for safeguards).
    All five of the nuclear weapon states are members of the 
ZC. However, China is the only ZC member that is not also a 
member of the Nuclear Suppliers Group (NSG), which requires 
full-scope safeguards (FSS) as a condition of nuclear supply to 
NNWS. China has not been willing to require FSS as a condition 
of nuclear supply in accordance with the NSG Guidelines--an 
important distinction from the ZC.
    The ZC held three meetings on November 26, 2001, in Vienna. 
The first meeting was the Technology Holders Working Group, 
under the chairmanship of Sweden, which focused on adding 
plutonium isotope separation equipment to the Trigger List. At 
the ZC Plenary meeting that afternoon, the Working Group Chair 
reported that Technology Holders were closer to consensus on 
new language, but that some members needed more time for 
consideration of the proposal.
    The second November 26 meeting was the Friends of the Chair 
to discuss; (1) outcomes of the 2000 NPT RevCon; (2) possible 
outreach activities with NPT Party non-members, including 
review of a UK non-paper on the subject; (3) review of ZC 
``understandings'' (guidelines) to determine if updating is 
needed; and (4) actions that might be taken in preparation for 
2002 or 2003 NPT PrepComs and recommendations that could be 
made to the 2005 NPT RevCon.
    The ZC's Austrian Chair outlined an ambitious program of 
possible future ZC activities, including serving as an NPT-wide 
technical resource, encouraging early ratification by states of 
the Additional Protocol to strengthen IAEA safeguards, and 
promoting outreach dialogue with non-member NPT Party states, 
particularly members of the NAM who have been critical of the 
nonproliferation regimes. The Chair also noted that in light of 
the events of September 11, the ZC should consider exploring 
new areas such as the combating of illicit trafficking.
    The third November 26 meeting was the ZC Plenary that 
reviewed the Friends of the Chair discussion on outreach. There 
was strong support for the UK outreach paper, which outlined 
various options for promoting dialogue with NPT Party non-
members. Most members, including the United States, supported 
pursuing several outreach approaches including ZC-NAM forums 
and roundtable discussions as well as ZC seminars and workshops 
for selected NAM countries. However, some members had 
reservations, suggesting that the ZC, as a technical body, 
needed to avoid political activities such as outreach programs. 
There was a general consensus that ZC outreach activities 
should be conducted on an informal basis and not duplicate NSG 
outreach activities nor involve non-NPT states such as India, 
Israel and Pakistan. Some members were concerned about limiting 
outreach dialogue to NPT Party critics of the nonproliferation 
regimes and suggested that it would be more useful to engage 
non-ZC NPT Party states supportive of nonproliferation regimes.
    The United States reported that it was not prepared to join 
in a consensus in ZC membership for Belarus owing to concerns 
about certain of the GOB's nonproliferation policies. The 
Russians questioned the U.S. position, given that Belarus was 
an NPT Party, a member of the NSG, and had enacted the 
necessary export control legislation to accord with NSG and ZC 
Guidelines. The United States suggested that Belarus be 
encouraged to cease questionable supply activities.
    Nuclear Suppliers Group: With 39 member states, the Nuclear 
Suppliers Group (NSG) is a widely accepted and effective export 
control arrangement, which contributes to the nonproliferation 
of nuclear weapons through implementation of guidelines for 
control of nuclear and nuclear-related exports. Members pursue 
the aims of the NSG through adherence to the Guidelines, which 
are adopted by consensus, and through exchanges of information 
on developments of nuclear proliferation concern.
    The first set of NSG Guidelines (Part 1) governs exports of 
nuclear materials and equipment that require the application of 
IAEA safeguards at the recipient facility, FSS in the recipient 
state, commitments for no nuclear explosive use, and retransfer 
controls. The second set of NSG Guidelines (Part 2) governs 
exports of nuclear-related dual-use equipment and materials. 
The NSG Guidelines also control technology related to both 
nuclear and nuclear-related dual-use exports.
    At the U.S.-hosted 2001 NSG Plenary meeting May 10-11, 2001 
in Aspen, Colorado, the United States achieved its main 
objectives on restructuring the regime's mechanisms and 
procedures and revising its Guidelines. Moreover, the Plenary 
strongly reaffirmed its support of full-scope IAEA safeguards 
as a condition of nuclear supply and rejected Russian proposals 
to broaden the safety exemption to the FSS policy and to confer 
``associate member'' status on India, Israel and Pakistan to 
permit nuclear cooperation with those countries. However, the 
Plenary did agree to consider possibilities for an 
``intensified dialogue'' with the three countries.
    The Plenary also agreed to the establishment of a new 
Consultative Group (CG) which, under Plenary direction, will 
meet twice a year to deal with both Part 1 and 2 issues, 
including review of the Guidelines and control lists, 
procedures, information sharing, transparency and outreach 
activities. The CG also replaced the NSG Dual Use Regime (DUR), 
which previously had responsibility for coordination of dual-
use control issues. The 2001 NSG Plenary also accepted the 
offer of the Czech Republic to chair the 2002 NSG Plenary, 
welcomed Slovenia to its first Plenary meeting, and authorized 
the United States as NSG Chair to continue contacts with 
Kazakhstan regarding possible future NSG membership. The 
Plenary took note of the concluding reports of Chairman of the 
DUR, the Information Sharing Working Group, and the 
Transparency Working Group. All of these groups will be 
replaced by the CG.
    The Plenary also took note of the report on outreach 
activities with non-members by the outgoing French Chair, who 
reported contacts with China, Egypt, India and Iran. The 
Plenary authorized the U.S. Chair to continue coordination of 
outreach contacts with non-members.
    The first meeting of the CG, held November 27-28, 2001, in 
Vienna under the chairmanship of France, was very productive. 
The CG discussed options for an intensified dialogue with 
India, Israel and Pakistan. The CG Chairman circulated in March 
2002 a summary of Member Government areas of agreement and 
disagreement on intensified dialogue. The May 2002 CG will seek 
to reach consensus on a recommendation to the 2003 Plenary to 
approve topics such as physical protection, export control, and 
enforcement for the intensified dialogue that the new Czech NSG 
Chair could pursue. Most Member Governments favor a dialogue 
with India, Israel and Pakistan but are concerned that it not 
be misinterpreted as undercutting fundamental NSG 
nonproliferation principles. In other business, the CG welcomed 
the offer of South Korea to host the 2003 NSG Plenary in Seoul, 
and endorsed a UK proposal to have the NSG sponsor a meeting of 
licensing and enforcement officials during the 2002 Plenary as 
part of the Information Exchange Meeting. The CG also welcomed 
a U.S. offer to draft a paper on possible changes to the 
Guidelines to incorporate anti-terrorism measures.
    South Asia Nuclear: Since their May 1998 nuclear tests, 
India and Pakistan have openly pursued their respective nuclear 
weapon programs and have continued to increase their stockpiles 
of fissile material. Both maintain active ballistic missile 
programs and have flight-tested short- and medium-range 
ballistic missiles. Each could deploy nuclear weapons in a 
short period of time. The United States has raised its WMD and 
missile proliferation-related concerns with Indian and 
Pakistani officials on many occasions, calling on them to: 
maintain their nuclear testing moratoria; not assemble nuclear 
weapons; bring an early end to the production of fissile 
material; return any missiles deployed during the current 
crisis to pre-crisis status as soon as possible; limit flight-
tests of ballistic missiles; resume their bilateral dialogue; 
bring their export controls in line with international 
standards; prevent and refrain from transfers of nuclear-, 
missile-, and CBW-related items to other countries; and help 
prevent proliferation globally.
    Some progress has been achieved in bringing Indian and 
Pakistani export controls into closer conformity with 
international standards. In April 2000, India instituted new, 
more specific regulations on many categories of sensitive non-
nuclear equipment and technology and has said that nuclear-
related regulations will be forthcoming. In July 2001, Pakistan 
publicly announced regulations restricting nuclear exports and 
has indicated that further measures are being prepared. 
However, both countries' steps still fall short of 
international standards. We have proposed to both India and 
Pakistan technical cooperation activities designed to improve 
the effectiveness of their export controls, and encourage 
further steps to bring controls in line with international 
standards.
    On September 22, 2001, President Bush waived Glenn 
Amendment sanctions that were imposed on India and Pakistan 
following their May 1998 nuclear tests. The President also 
waived sanctions imposed on Pakistan under the Ex-Im Bank Act 
and the Pressler and Symington Amendments. These steps do not 
signal a diminution of U.S. nonproliferation commitments, but 
rather a desire to engage India and Pakistan on our 
nonproliferation concerns in a less coercive atmosphere.
    U.S.-DPRK Agreed Framework: In October 1994, the United 
States and the Democratic People's Republic of Korea (DPRK or 
North Korea) signed the Agreed Framework in an effort to 
resolve concerns about North Korea's nuclear program and bring 
the DPRK into compliance with its NPT commitments. As part of 
the Agreed Framework, North Korea undertook to freeze and 
dismantle its graphite-moderated nuclear reactors and related 
facilities at Yongbyon and Taechon. It also undertook to remain 
party to the NPT and come into full compliance with its IAEA 
safeguards agreement including taking all steps deemed 
necessary by the IAEA when a significant portion of the light-
water reactor is completed, but before delivery of key nuclear 
components. North Korea has yet to begin significant 
cooperation with the IAEA toward this end. The United States 
has called on North Korea to begin full cooperation so it can 
live up to its commitments in the Agreed Framework. Meanwhile, 
the United States assesses that the freeze at Yongbyon and 
Taechon, monitored by the IAEA, remains in place. The IAEA has 
maintained a continuous, presence in the DPRK since 1994.
    Canning of all accessible spent fuel rods and rod fragments 
from the DPRK's 5-megawatt graphite-moderated nuclear reactor 
was completed in April 2000. The IAEA continues to monitor the 
canned fuel pending its ultimate removal from the DPRK once key 
nuclear components begin to be delivered. A U.S. spent fuel 
team periodically returns to the DPRK to continue maintenance 
operations and recondition leaking canisters.
    Although the Agreed Framework creates a process for 
resolving the North Korean nuclear issue vis-a-vis the declared 
graphite-moderated reactors and related facilities, concern 
about the DPRK's nuclear intentions remains. The United States 
remains committed to the Agreed Framework, as long as the DPRK 
meets its obligations. However, we are concerned with North 
Korea's failure to take steps needed to achieve full 
cooperation with the IAEA, and to rectify its ongoing 
noncompliance with the NPT. Concern over this issue and others 
(lack of demonstrable steps to implement the North-South Joint 
Declaration on Denuclearization of the Korean Peninsula, and no 
reduction in the North Korean ballistic missile threat) led 
President Bush to waive the Congressional certification 
requirements for U.S. funding of heavy fuel oil for the Korean 
Peninsula Energy Development Organization (KEDO). Under the 
Agreed Framework, North Korea receives 500,000 tons of heavy 
fuel oil, purchased through KEDO.
    In June 2001, President Bush announced that the 
Administration was prepared to undertake serious talks with the 
DPRK on a broad range of topics including improved 
implementation of the Agreed Framework relating to North 
Korea's nuclear activities; verifiable constraints on North 
Korea's missile programs and a ban on its missile exports; and 
a less threatening conventional force military posture. At the 
end of April, the DPRK informed the State Department that it 
was prepared to begin bilateral talks.
    Iran Nuclear: Despite its status as an NPT party, Iran 
maintains an active nuclear weapons development program. Among 
the persistent indicators that Iran is pursuing a nuclear 
weapons development program is the fact that Iran is attempting 
to obtain capabilities to produce both highly enriched uranium 
and plutonium--the critical materials for a nuclear weapon. 
Neither of these capabilities is necessary to meet Iran's 
declared desire to have a civil nuclear power program to 
generate electricity, which is itself suspicious in light of 
Iran's abundant oil resources.
    For the time being, Iran's nuclear program remains 
dependent on external sources of supply. The United States has 
played the leading role in developing and maintaining a broad 
international consensus against assisting Iran's foreign 
procurement efforts. We deny Iran access to U.S. nuclear 
technology and material, and all major Western suppliers have 
agreed not to provide nuclear technology to Iran. A number of 
supplier states have abandoned potentially lucrative sales to 
Iran's nuclear program. Russia remains the most significant 
exception to this virtual embargo on nuclear cooperation with 
Iran. The Administration is actively engaged with Russia in an 
attempt to resolve differences over the nature and scope of 
Russian cooperation with Iran's nuclear programs.
    Iraq Nuclear: We believe that some nuclear activity has 
continued in Iraq since UN inspections stopped in December 
1998. The acquisition of highly-enriched uranium or weapons-
grade plutonium remains Iraq's biggest obstacle to a nuclear-
weapons capability. We remain concerned that Iraq still seeks 
to acquire a nuclear weapons capability.

                    CHEMICAL AND BIOLOGICAL WEAPONS

    EPCI Regulations: The export control regulations issued 
under the Expanded Proliferation Control Initiative (EPCI) 
remain fully in force and continue to be administered by the 
Department of Commerce, in a consultation with other agencies, 
in order to control the export of items with potential use in 
WMD or missile programs. In particular, EPCI is being applied 
to items with potential use in chemical or biological weapons 
or unmanned delivery systems for weapons of mass destruction.
    Chemical Weapons Convention (CWC): 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 (known as the 
Chemical Weapons Convention or CWC) entered into force with 87 
of the CWC's 165 States Signatories as original States Parties, 
including the United States, which ratified on April 25, 1997. 
As of the end of this reporting period, 145 countries have 
become States Parties.
    The implementing body for the CWC--the Organization for the 
Prohibition of Chemical Weapons (OPCW)--carries out the 
verification provisions of the CWC, and presently has a staff 
of approximately 500 international civil servants, including 
about 200 inspectors trained and equipped to inspect military 
and industrial facilities throughout the world. To date, the 
OPCW has conducted over 1100 routine inspections at over 500 
sites in some 50 countries. No challenge inspections have yet 
taken place. The OPCW maintains an inspector presence at 
operational CW destruction facilities. U.S. facilities have 
hosted approximately one-third of OPCW inspections and two-
thirds of total inspection days (due to the significant level 
of CW destruction activity in the United States).
    The United States is determined to seek full implementation 
and compliance with the concrete measures within the CWC. This 
includes accurate and complete declarations from all States 
Parties and compliance with the CWC's inspection provisions 
that provide for access by international inspectors to declared 
and potentially undeclared facilities and locations. The United 
States is actively taking steps to strengthen the OPCW's 
ability to effectively implement the CWC, including recently 
securing a much-needed change in OPCW leadership.
    We also are working to ensure that countries that refuse to 
join the CWC are increasingly isolated politically and denied 
access under the CWC's provisions to certain key chemicals from 
States Parties. The relevant treaty provisions are specifically 
designed to penalize countries that refuse to become party to 
the CWC.
    Biological Weapons Convention: The United States agreed in 
1994 to participate in an AD Hoc Group to negotiate a Protocol 
to the 1972 Biological Weapons Convention (BWC) that would 
``strengthen the effectiveness and improve the implementation 
of the Convention.'' On July 25, 2001, after a thorough United 
States Government policy review, the United States announced 
that the draft Protocol text was unacceptable and unfixable. At 
the Fifth BWC Review Conference last November, the 
Administration offered a number of other ideas and alternative 
approaches that would be effective in combating the threat of 
BW proliferation and in strengthening the BWC. When the Review 
Conference resumes in November 2002, the United States will 
seek agreement to these proposals, a number of which are 
already being implemented at national levels.
    Australia Group: The United States continues to be a 
leading participant in the 33-member Australia Group (AG) 
chemical and biological weapons nonproliferation regime. At the 
most recent annual AG Plenary Session from October 1-4, 2001, 
the Group reaffirmed the members' continued collective belief 
in the AG's viability, importance and compatability with the 
CWC and BWC. Responding to the terrorist events of September 
11, AG participants agreed that strengthening the regime to 
better counter CBW proliferation and CBW terrorism should be a 
priority.
    Participants agreed to several proposals aimed at plugging 
loopholes in current AG export controls; they also agreed that 
export controls, regional nonproliferation and countering CBW 
terrorism will be the main focus of the Group for the 
foreseeable future. These proposals were further developed at 
intersessional meetings in February and April 2002. Members 
also continued to agree that full adherence to the CWC and BWC 
by all governments will be a key to achieving 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. The Group 
welcomed Bulgaria as its newest member and 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.
    Sanctions/Interdiction: During the last six months, we 
continued to examine closely intelligence and other information 
concerning trade in CBW-related material and technology. In May 
2002, the United States imposed penalties on two Armenian and 
five Chinese entities, pursuant to the Iran Nonproliferation 
Act of 2000, for transferring AG-controlled items to Iran. 
Penalties imposed in January 2002 and June 2001, pursuant to 
the Iran Nonproliferation Act, on a total of four Chinese 
entities for their involvement in the transfer of AG-controlled 
items to Iran also remain in effect. The United States 
continues to cooperate with its AG partners and other countries 
in stopping shipments of proliferation concern.
    Country Issues: Iran continues to seek precursors and 
production technology to augment its CW stockpile, and 
continues to actively pursue biological warfare capabilities. 
In the absence of UN inspections and monitoring, Iraq may be 
reconstituting its WMD programs. Syria and Libya continue to 
make some improvements to their CW infrastructure and both may 
be pursuing limited biological agent development. North Korea 
has a dedicated, national-level effort to achieve a BW 
capability and has developed and produced, and may have 
weaponized, BW agents. North Korea is also assessed to maintain 
a stockpile of CW agents. Sudan has received foreign assistance 
in the development of a CW program and may be actively pursuing 
more advanced capability, perhaps in cooperation with other 
state sponsors of terrorism.

          MISSILES FOR DELIVERY OF WEAPONS OF MASS DESTRUCTION

    The United States rigorously controls exports that could 
contribute to unmanned delivery systems for weapons of mass 
destruction, and monitors closely activities of potential 
missile proliferation concern. We also continue to implement 
U.S. missile sanctions laws. During the reporting period, no 
new missile sanctions were imposed. However, the United States 
imposed penalties on a number of entities, pursuant to the Iran 
Nonproliferation Act of 2000 (see below).
    Missile Technology Control Regime: The 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.
    As agreed to the September 2001 Ottawa Plenary, the MTCR 
Partners held a Reinforced Point of Contact (RPOC) meeting in 
Paris on April 25-26. The meeting focused on regional missile 
proliferation issues and resulted in a detailed and productive 
discussion of additional measures Partners could take to 
address the missile proliferation threat. The Partners also 
discussed ways to enhance outreach and transparency to non-
members, the ongoing need to impede proliferation procurement 
efforts, and the importance of vigorous export control 
enforcement. The Partners will give further attention to these 
important topics at the September 2002 MTCR Plenary in Warsaw.
    International Code of Conduct Against Ballistic Missile 
Proliferation: The United States was one of 78 countries that 
participated in a meeting hosted by France on February 7-8 on 
universalization of the draft International Code of Conduct 
Against Ballistic Missile Proliferation (ICOC). The meeting was 
an opportunity for participants to provide views on this 
important issue. However, no decisions were taken on next 
steps. The European Union has offered to hold a follow-up 
meeting, and we expect France to announce soon plans for taking 
the ICOC process forward.
    The ICOC is intended to create a widely-subscribed 
international predisposition against ballistic missile 
proliferation. It consists of a broad set of principles, 
general commitments, and modest confidence building measures. 
It is intended to be a voluntary political commitment, not a 
treaty, and will be open to all countries. The ICOC will 
supplement, not supplant, the important work of the MTCR.
    Sanctions: In May, the United States imposed penalties on 
two Moldovan entities, pursuant to the Iran Nonproliferation 
Act of 2000, for the transfer of MTCR-controlled items to Iran. 
(NOTE: The United States also imposed penalties on three 
Chinese entities, pursuant to the Iran Nonproliferation Act of 
2000 for engaging in conventional weapons-related cooperation 
with Iran. END NOTE.) No new missile sanctions, however, were 
imposed during the reporting period.
    On November 2, 2001, in order to facilitate certain 
necessary cooperation with the Pakistani Ministry of Defense 
(MOD) in support of Operation Enduring Freedom, the United 
States waived certain missile sanctions imposed against the 
Pakistani MOD in November 2000 for transactions determined to 
be needed (1) to support Operation Enduring Freedom or (2) to 
permit sale or export to Pakistan of defense articles or 
defense services comparable to those delivery of which was 
blocked by the imposition of sanctions on May 30, 1998. On 
November 21, 2000, Category I missile sanctions were imposed on 
the Pakistani MOD and the Space and Upper Atmosphere Research 
Commission (SUPARCO) for their knowing engagement in missile 
proliferation activities with Chinese entities. Missile 
sanctions imposed against SUPARCO and another entity, NDC in 
September 2001, remain unchanged.
    South Asia Missile: India has an extensive, largely 
indigenous ballistic missile development and production 
program. Nevertheless, India's ballistic missile programs have 
benefited from the acquisition of foreign equipment and 
technology, which it continues to seek. India conducted flight 
tests of a variety of missiles during the reporting period, 
including the sea-based Dhanush, a short-range version of the 
Agni, and the Brahmos cruise missile it jointly developed with 
Russia.
    Pakistan has an active ballistic missile program and, 
during the last several years, has received considerable 
Chinese and North Korean assistance in these efforts. Continued 
development of nuclear-capable ballistic missiles by both 
countries raises the prospect that more sophisticated and 
possibly destabilizing capabilities will be fielded in the 
coming years. Such a race constitutes a threat to regional and 
international security.
    DPRK Missile: Although the DPRK has maintained its 
September 1999, self-imposed, long-range missile flight test 
moratorium, it has, during the last several years, been 
extremely active in the research, development, testing, 
deployment and export of ballistic missiles and related 
equipment and technology. The DPRK also is working to increase 
the capability of its missile systems. During meetings with 
other international leaders in 2001, including Russian 
President Putin, PRC President Jiang Zemin, and Swedish Prime 
Minister Persson, DPRK Chairman Kim Jong-Il reportedly stated 
North Korea's commitment to maintain its moratorium until 2003.
    As noted above, pursuant to the Administration's North 
Korea policy review, on June 6, 2001, President Bush announced 
that the United States was prepared to undertake serious 
discussions with North Korea on a broad agenda, to include: 
improved implementation of the Agreed Framework relating to 
North Korea's nuclear activities; verifiable constraints on 
North Korea's missile programs and a ban on its missile 
exports; and a less threatening conventional military posture. 
On April 27, the DPRK informed the State Department that it was 
prepared to begin bilateral talks.
    Iran Missile: Iran has substantial missile inventories and 
an indigenous ballistic missile production capability. In 
recent years, North Korean, Russian and Chinese entities have 
continued to supply Iran with a wide variety of missile-related 
goods, technology and expertise. In response to Iranian efforts 
to acquire sensitive items from Russian entities for use in 
Iran's missile and nuclear development programs, the United 
States has pursued a high-level dialogue with Russia aimed at 
funding ways to work together to cut off the flow of sensitive 
goods to Iran's ballistic missile development and nuclear 
weapon programs. Russia's government has created institutional 
foundations to implement its nonproliferation commitments and 
passed laws to punish wrongdoers. It also has passed new export 
control legislation and adopted implementing regulations to 
tighten government control over sensitive technologies and 
continued a dialogue with the United States aimed at 
strengthening export control practices at Russian aerospace 
firms. However while some progress has been made, we are 
concerned that Russian entities continue to supply missile 
technology and equipment to Iran.
    Other Countries: Other countries in addition to the above 
are pursuing missile programs. Iraq retains a significant 
missile production capability, continues work on short-range 
ballistic missiles allowed by UNSCR 687, and may be expanding 
to longer-range systems. Technical experience gained in this 
pursuit will likely be applied to future longer-range missile 
development efforts. Libya's limited success with its 
indigenous missile production effort may renew its focus on 
purchasing a complete ballistic missile system. Syria continues 
to acquire missile-related equipment and materials, and has 
received considerable foreign production assistance.

               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 United States uses to achieve its 
nonproliferation objectives. Global nonproliferation treaties 
and norms, multilateral nonproliferation 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 emerging WMD and missile program seeks equipment 
and technology from other countries. Proliferators look to 
other sources because needed items are unavailable within their 
country, because indigenously produced items are of substandard 
quality or insufficient quantity, and/or because imported items 
can be obtained more quickly and cheaply than domestically-
produced ones.
    It is important to note that proliferators seek for their 
WMD and missile programs both items on multilateral lists (like 
gyroscopes controlled on the MTCR Annex and nerve gas 
precursors on the AG 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 precursors and technologies used in the 
production of fertilizers or pesticides also can be used to 
make missile propellant and chemical weapons; bio-production 
technology can be used to produce biological weapons.
    The most obvious value of export controls is in impeding or 
denying proliferators access to key pieces of equipment or 
technology for use in their WMD and/or missile programs. In 
large part, U.S. national export controls--and similar controls 
of our partners in the AG, MTCR, and NSG--strive to deny 
proliferators access to the largest sources of the best 
equipment and technology. If denied, proliferators might then 
turn to non-regime suppliers to seek less capable items. 
Moreover, in many instances, U.S. and regime controls and 
associated efforts have forced proliferators to engage in 
complex clandestine procurements, taking time and money away 
from their WMD and missile programs.
    U.S. national export controls and those of our regime 
partners also have played an important role in increasing over 
time the critical mass of countries applying nonproliferation 
export controls. For example: the seven-member MTCR of 1987 has 
grown to 33 member countries; the NSG adopted full-scope 
safeguards as a condition of supply and extended new controls 
to nuclear-related dual-use items; several non-member 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 it is believed that those items could be 
destined for WMD and/or missile programs.)
    The United States maintains a global program to assist 
other countries' efforts to strengthen their export control 
systems. Assistance is focused on helping weapons-source 
countries along potential smuggling routes to develop effective 
export control regimes, including effective capabilities to 
control illicit weapons trafficking across their borders; to 
establish the necessary legal and regulatory basis for 
effective export controls; to improve licensing procedures and 
practices; to coordinate, train, and equip export enforcement 
agencies, including customs agents and border security and 
enforcement authorities; to develop and install automated 
information systems for licensing and enforcement; and to 
foster effective interaction between government and industry on 
export controls.
    This program has placed some 19 advisors in countries 
around the world to coordinate export control/border security 
activities. The program continues to register successes: new 
cooperative relationships have been established with key 
transshipment states; a number of countries have adopted, or 
are adopting, export and transshipment control laws and 
regulations largely based on U.S. advice; the program has 
contributed to a significant strengthening of border security 
capabilities in former Soviet states, notably in Central Asia; 
and various countries' enforcement agencies have used U.S. 
equipment and training to interdict the movement of arms, 
related items and radioactive materials across borders.
    Finally, export controls play an important role in enabling 
and enhancing legitimate trade. They provide a means to permit 
dual-use exports 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 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 AND NONPROLIFERATION ASSISTANCE TO THE FORMER SOVIET 
                                 STATES

    The President has made clear repeatedly that his 
Administration is committed to strong, effective cooperation 
with Russia and the other former Soviet states to reduce 
weapons of mass destruction and prevent their proliferation. To 
ensure that the promise of these programs is fully realized, 
the Administration undertook in 2001 a detailed review of U.S. 
nonproliferation and threat reduction assistance to the Russian 
Federation. The review was completed in December 2001. It found 
that most U.S. programs in this area work well, are focused on 
priority tasks, and are well managed. The review further 
identified some programs for expansion and others for 
adjustment. In keeping with the President's commitment, and the 
results of the review, the President's FY2003 budget included 
historically high requests to the Congress for nonproliferation 
and threat reduction assistance to the former Soviet States.

                                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 12, 2001, through May 15, 2002.

                                  
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