[House Document 108-7]
[From the U.S. Government Publishing Office]
108th Congress, 1st Session - - - - - - - - - - - - - House Document 108-7
PERIODIC REPORT ON THE NATIONAL EMERGENCY CAUSED BY THE LAPSE OF THE
EXPORT ADMINISTRATION ACT OF 1979
__________
COMMUNICATION
from
THE PRESIDENT OF THE UNITED STATES
transmitting
A 6-MONTH REPORT ON THE NATIONAL EMERGENCY DECLARED BY EXECUTIVE ORDER
13222 OF AUGUST 17, 2001, TO DEAL WITH THE THREAT TO THE NATIONAL
SECURITY, FOREIGN POLICY, AND ECONOMY OF THE UNITED STATES CAUSED BY
THE LAPSE OF THE EXPORT ADMINISTRATION ACT OF 1979, PURSUANT TO 50
U.S.C. 1641(c) AND 50 U.S.C. 1703(c)
January 7, 2003.--Referred to the Committee on International Relations
and ordered to be printed
The White House,
Washington, November 26, 2002.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: 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 report prepared by my
Administration on the national emergency declared by Executive
Order 13222 of August 17, 2001, to deal with the threat to the
national security, foreign policy, and economy of the United
States caused by the lapse of the Export Administration Act of
1979.
Sincerely,
George W. Bush.
Periodic Report on the National Emergency Caused by the Lapse of the
Export Administration Act of 1979 for February 19, 2002 to August 19,
2002
Since the issuance of Executive Order No. 13222, the
Department of Commerce has continued to administer and enforce
the system of export controls, including the antiboycott
provisions, contained in the Export Administration Regulations
(EAR). In administering these controls, the Department has
acted under a policy of conforming actions under Executive
Order 13222 to the provisions of the Export Administration Act
(EAA), insofar as appropriate. This report to the Congress
covers activities and expenditures for the 6-month period of
February 19, 2002 to August 19, 2002.
The expenses incurred by the Federal Government in the 6-
month period from February 19, 2002 to August 19, 2002, that
are directly attributable to the exercise of authorities
conferred by the declaration of a national emergency with
respect to export controls, were largely centered in the
Department of Commerce's Bureau of Industry and Security (BIS).
Expenditures by the Department of Commerce for the reporting
period are anticipated to be $32,958,000 most of which
represents program operating costs, wage and salary costs for
Federal personnel, and overhead expenses.
There were several significant developments in the area of
export controls during the reporting period:
A. MULTILATERAL DEVELOPMENTS
The Wassenaar Arrangement
The Wassenaar Arrangement is a multilateral regime
currently consisting of 33 member countries. Its purpose is to
contribute to regional and international security and stability
by promoting transparency and greater responsibility in
international transfers of conventional arms and dual-use goods
and technologies.
In May 2002, the Wassenaar Arrangement General Working
Group exchanged information regarding regions and projects of
concern, dual-use goods and technologies, and the scope of
dual-use notifications. Discussions also centered around
combating terrorism, and U.S. proposals for expanded reporting
of conventional arms transfers, strengthening dual-use
notification procedures by establishing a denial consultation
procedure, and adopting ``catch-all'' controls within the
Wassenaar.
In June 2002, the annual Licensing and Enforcement Officers
Meeting was held to exchange information on national practices
of licensing and enforcement procedures. Discussions included
legal export of small arms/light weapons, arms brokering,
control of intangible transfers of technology and software,
national general licensing/licensing exception practices, and
implementation aspects of International Import Certificates/
End-User Certificates.
The United States also continues to participate in
submissions of export data made by regime members. Wassenaar
members make dual-use data submissions on a semi-annual basis
in April and October, and a smaller class of specific data
submissions as needed.
The Missile Technology Control Regime (MTCR)
The MTCR is an informal multilateral nonproliferation
regime of 33 countries that have agreed to coordinate their
national export controls for the prevention of missile
proliferation. Each member, under its own laws and practices,
adheres to the export licensing policy reflected in the MTCR
Guidelines for items found on the MTCR Equipment and Technology
Annex.
On April 22-24, 2002, an intersessional MTCR Technical
Experts Meeting (TEM) was held in Vienna. This meeting focused
on proposed changes to the MTCR Annex on inertial navigation
systems, global navigation satellite systems, flight control
servo valves, telemetry equipment, and missile range and
payload definitions. The United States circulated several white
papers for discussion.
The Nuclear Suppliers Group (NSG)
With 40 member states, the NSG is a widely accepted,
mature, and effective export control arrangement that
contributes to the nonproliferation of nuclear weapons through
implementation of guidelines for the control of nuclear and
nuclear-related exports. Members pursue the aims of the NSG
through voluntary adherence to the Guidelines, which are
adopted by consensus, and through exchanges of information on
developments of nuclear proliferation concern. The Guidelines
assist member states in administering national nuclear export
control programs, which are focused on nucelar material,
equipment, and technology unique to the nuclear industry, and
so-called nuclear dual-use items that have both nuclear and
non-nuclear applications.
The Czech Republic hosted the 2002 NSG Plenary and related
meetings in Prague from May 13-17. On May 13, the first
Licensing and Enforcement Experts Meeting (LEEM) was held as a
trial run under the chairmanship of the United Kingdom, and
under the aegis of the Information Exchange Meeting (IEM). LEEM
participants made presentations on licensing and enforcement
infrastructure and coordination, as well as case studies. NSG
members agreed that the LEEM was successful and should become a
regular part of the NSG Plenary week. The IEM was also very
successful, with 18 presentations by nine Participating
Governments on nuclear activities of concern, analyses of
export denials, and technical briefings.
The NSG Consultative Group (CG) met on May 14 and 15, and
discussed U.S. counterterrorism proposals including amendments
to the Guidelines and expanded information sharing. There was
broad support in principle for addressing the issue of nuclear
terrorism, although some delegations suggested a cautious
approach on any amendments to the Guidelines. The CG
recommended, and the Plenary agreed, to continue discussion of
the anti-terrorism proposals.
The NSG Plenary met on May 16 and 17. The Czech Republic
acceded to the Chair of the NSG. Kazakhstan was welcomed as a
newly admitted member. The U.S. Acting Outgoing NSG Chair
reported on the activities and work of the NSG since May 2001,
including outreach contacts with non-member governments. The
Plenary authorized the new NSG Chair to continue outreach
contacts with China, Egypt, India, Iran, and Pakistan, and
initiate contacts with Malaysia, Mexico, Indonesia, and Israel.
Many delegations expressed continued concern over differing
interpretations within the NSG of the NSG Guidelines,
particularly if such interpretations undermine the credibility
of the NSG and the objectives of the Nuclear Non-Proliferation
Treaty. This issue will continue to be discussed at future NSG
meetings. The Plenary welcomed the offer of the Republic of
Korea to host the 2003 Plenary in May 2003.
The Australia Group (AG)
The AG is an informal multilateral export control regime
that seeks to impede the proliferation of chemical and
biological weapons through the harmonization of export
controls, an exchange of information on global proliferation
activities, and outreach to non-members. The 33 member
countries meet annually and communicate intersessionally to
review and refine the list of controlled chemicals, biological
agents, and related equipment and technology.
In April 2002, five U.S. proposals developed by the
Department of Commerce that broaden AG export controls on
commodities and technology useful in the production of
chemical/biological weapons, were submitted for consideration
at the intersessional AG Technical Experts Meeting (TEM). In
May 2002, technical experts from five AG member-nations--
Germany, Japan, Switzerland, the United Kingdom, and the United
States--reached common positions on technical issues proposed
for review at the AG Plenary.
At the AG Plenary held in June 2002, agreement was reached
on export control additions on intangible technology transfers,
biological technology, biological production equipment, and the
addition of eight biological agents to the AG control list.
Consensus was also reached to adopt licensing guidelines that
include chemical-biological terrorism as an explicit focus of
the regime, and on the universal licensing of exports of
biological agents to non-AG members and AG members alike, with
the exception of intra-European Union trade. These
unprecedented measures were taken to collectively strengthen
the regime, and broaden its nonproliferation focus.
In July 2002, technical experts from France, Germany,
Italy, Japan, the Netherlands, Switzerland, the United Kingdom
and the United States reviewed technical proposals for possible
consideration at the next AG Plenary schedule for June 2003 in
London.
The Chemical Weapons Convention
The Chemical Weapons Convention is an international arms
control and nonproliferation treaty that bans chemical weapons
and monitors the legitimate production, processing,
consumption, export, and import of certain toxic chemicals and
precursors that could contribute to the development of weapons
of mass destruction. Certain export control provisions of the
Convention are reflected in the EAR.
Firearms Convention
The Inter-American Convention Against the Illicit
Manufacturing of and Trafficking in Firearms, Ammunition,
Explosives, and Other Related Materials (Firearms Convention)
is a treaty that Organization of American States (OAS) member
states signed to control the illicit trafficking of firearms.
The Convention was signed in 1998 but awaits ratification by a
number of OAS member states, including the United States. The
Convention requires OAS member states to establish a program to
issue authorizations for the import and export of firearms.
Most of the Convention requirements relating to the export of
firearms have been executed, however, those requirements
pertaining to transit and explosives continue to be reviewed by
an interagency working group.
B. ENCRYPTION/HIGH PERFORMANCE COMPUTER POLICY
Encryption
In June 2002, a rule was published in the Federal Register
updating the U.S. encryption export policy. The rule amends the
Export Administration Regulations to reflect changes that were
made in the Wassenaar Arrangement List of dual-use items. As a
result of the revisions made by this rule, mass market
encryption commodities and software with symmetric key lengths
exceeding 64 bits may be exported and reexported to most
destinations without a license, following a 30-day review by
the U.S. Department of Commerce. In addition, the rule expands
License Exception Encryption Commodities and Software (ENC)
eligibility to authorize exports and reexports of information
security test, inspection, and production equipment controlled
under Export Control Classification Number (ECCN) 5B002.
Finally, the rule updates and clarifies the notification,
review, licensing, and post-export reporting requirements that
apply to certain encryption items.
High Performance Computer and Microprocessor Controls
In March 2002, a rule was published in the Federal Register
implementing the President's January 2002 decision to revise
U.S. export controls on high performance computers (HPCs).
There was a statutorily-required 60-day waiting period between
the time of the President's announcement and the issuance of
the implementing regulations. HPCs with a composite theoretical
performance of up to 190,000 millions of theoretical operations
per second (MTOPS) can now be exported to Computer Tier 3
countries under License Exception Computers (CTP) without
advance approval or notification. The rule also moves Latvia
from Computer Tier 3 to Computer Tier 1 (effective May 2) and
adds Australia, New Zealand, Norway, Switzerland, and Turkey to
the list of countries eligible for exports and reexports of
software and technology for the development, production, or use
of HPCs under license exception.
C. BILATERAL COOPERATION/TECHNICAL ASSISTANCE
As part of the Administration's continuing effort to
encourage other countries to strengthen their national export
control systems, the Department of Commerce and other agencies
conducted a wide range of export control cooperation
discussions with a number of countries.
Republic of China (Taiwan)
In July and August 2002, the United States Government--
acting through the American Institute in Taiwan--hosted
consultations with visiting delegations from Taiwan. The July
consultations were held to discuss recent changes in U.S. and
Taiwan export controls, including effective dual-use export
control licensing procedures and practices and included a
discussion on the impact of the changes in Taiwanese investment
and technology transfer policy towards China. The August 2002
consultations involved in-depth discussions on the requirements
of the Chemical Weapons Convention (CWC) and how these
requirements relate to transfers of CWC scheduled chemicals to
Taiwan.
Nonproliferation and Export Control International Cooperation Program
During the reporting period, the Nonproliferation and
Export Control International Cooperation Program (NEC) hosted,
participated in, and/or coordinated 29 technical exchanges on
export controls in conjunction with representatives from the
Departments of Defense, Energy, State, and Treasury (U.S.
Customs Service). The technical exchanges included the Sixth
Regional Forum on Nonproliferation Export Control, held in
Tashkent, Uzbekistan during April 2002 for eight participating
Central Asian/Caucasus countries; a transshipment enforcement
conference in May 2002 in Barcelona, Spain, featuring
participation by ten Middle Eastern countries, fourteen EU
countries and Turkey; and a Regional Nonproliferation Export
Control Enforcement Workshop held in Bucharest, Romania in June
2002 for eleven participating Central and Southeast European
Countries. The programs sought not only to familiarize the
governments of Central and Eastern Europe, the Baltic and the
Balkans, the Caucasus, Kazakhstan, Kyrgyzstan, Tajikistan, and
Uzbekistan with the major elements comprising an export control
system that meets international standards for effectiveness,
but also to assist the governments in developing and
strengthening their own national export control systems. These
elements involve five functional areas: the legal and
regulatory framework necessary for an effective export control
system, licensing procedures and control lists, enforcement
mechanisms, industry-government relations, and system
administration and automation support. Programs conducted
during this period also included special activities and
multilateral conferences that related to NEC objectives. These
programs have contributed to a reduction of the proliferation
threat from and through the participating countries by
strengthening these countries' national export control systems.
D. REGULATORY ACTIONS: PUBLISHED AND PENDING
Wassenaar Arrangement
On March 8, 2002, a rule was published in the Federal
Register revising certain national security export control
parameters in Category 4 (Computers) of the Commerce Control
List to conform with changes in the Wassenaar Control List
agreed to in December 2000.
On June 6, 2002, a rule was published in the Federal
Register revising encryption export controls (Category 5--Part
2, Information Security) to conform with changes in the
Wassenaar Control List agreed to in December 2000. The rule
implementing the 2001 Wassenaar changes is pending interagency
review.
High Performance Computers and Microprocessors
On March 8, 2002, a rule was published in the Federal
Register implementing the President's Announcement of January
2, 2002, that liberalized controls on exports and reexports of
high performance computers under License Exception Computers
(CTP).
On March 21, 2002, a rule was published in the Federal
Register liberalizing controls on exports and reexports of
microprocessors to certain civil end-users under License
Exception Civil End-Users (CIV).
Missile Technology
On May 20, 2002, a rule was published in the Federal
Register implementing the changes agreed to at the September
2001 Missile Technology Control Regime (MTCR) Plenary Meeting.
The rule implementing the 1999 MTCR changes is pending
interagency review.
Australia Group and Chemical Weapons Convention Controls
On May 31, 2002, a rule was published in the Federal
Register implementing agreements reached at the October 2001
plenary meeting of the Australia Group and Australia Group
intersessional decisions. The rule clarifies controls on
mixtures and certain reexports of Chemical Weapons Convention-
controlled items. Finally, the rule added Nauru and Uganda to
the list of countries that are currently States Parties to the
Chemical Weapons Convention.
E. EXPORT LICENSE INFORMATION
During the reporting period, BIS continued to receive many
requests for export licensing information through the Freedom
of Information Act and through discovery requests during
enforcement proceedings. Consistent with section 12(c) of the
EAA, BIS continues to withhold from public disclosure
information obtained for the purpose of consideration of, or
concerning, export license applications, unless the release of
such information is determined by the Under Secretary to be in
the national interest, pursuant to Executive Order No. 13222's
directive to carry out the provisions of the EAA, to the extent
permitted by law.
During the reporting period, BIS submitted quarterly
reports to the Congress on the actions taken relating to
exports of agricultural commodities to Cuba. Section 906(b) of
the Trade Sanctions Reform and Export Enhancement Act of 2000
(TSRA) (Title IX of Pub. L. 106-387), as amended, requires the
submission of these quarterly reports. Two reports were
submitted to the Congress during the IEEPA reporting period.
The first report covered January-March 2002, and the second
covered April-June 2002. A third report--covering July-
September 2002--was submitted that covers a portion of the
IEEPA reporting period.
F. OFFICE OF INSPECTOR GENERAL AND THE GENERAL ACCOUNTING OFFICE
STUDIES
During the reporting period, BIS continued its cooperation
with the Office of Inspector General (OIG) and the General
Accounting Office (GAO). Specifically, the OIG initiated 3
studies and GAO initiated 12, continued 15, and closed 11
studies. (BIS has 27 GAO studies open and closed 11 during this
time frame.)
G. EXPORT ENFORCEMENT
In the reporting period, BIS through its offices of
Enforcement Analysis, Export Enforcement, and Antiboycott
Compliance, continued its programs to prevent diversions of
controlled items, investigate and enforce export control
violations, and enforce U.S. antiboycott rules.
Office of Enforcement Analysis (OEA)
In the reporting period, OEA continued to expand its Visa
Review Program. This program targets visa applications of
foreign nationals who may be entering the United States to
access technology controlled for national security reasons or
to procure items useful for weapons of mass destruction
programs. The Visa Review Program also provided leads to BIS's
Office of Export Enforcement relating to possible terrorist
activities identified subsequent to the terrorist attacks of
September 11, 2001.
OEA prevention activities also include a plan to target and
prioritize pre-license checks (PLCs) and post shipment
verifications (PSVs) to ensure that such end-use visits reflect
the full range of U.S. export control concerns. PLCs validate
information on export license applications, including end-user
reliability. PSVs strengthen assurances that exporters,
shippers, consignees, and end-users comply with the terms of
export licenses. The overall objective for conducting PLCs and
PSVs is to detect and prevent the illegal transfer of
controlled U.S.-origin items.
Another OEA activity is to compile information regarding
parties of concern and to maintain a watch list. Parties on the
watch list are screened against names on license applications
received by BIS to assess diversion risks, identify potential
violations, and determine the reliability of proposed end-users
of controlled U.S. items.
On December 20, 2001, as required by the National Defense
Authorization Act for FY 1998 (NDAA), BIS delivered to the
Congress its fourth annual report on HPC exports to Computer
Tier 3 countries.
Office of Export Enforcement (OEE)
During the reporting period, OEE opened 564 investigations,
some of which led to both criminal and administrative
sanctions. A total of $975,000 in civil penalties and criminal
fines were imposed for violations during this period. OEE also
issued 69 warning letters in cases of minor violations,
informing the recipients that OEE had reason to believe they
had violated the EAR, and that increased compliance efforts
were warranted.
Office of Antiboycott Compliance (OAC)
OAC implements the antiboycott provisions of the EAA and
the EAR. OAC performs three main functions: enforcing the EAR,
assisting the public in complying with antiboycott provisions,
and compiling and analyzing information regarding international
boycotts. During the reporting period, OAC opened ten cases,
closed 13 investigations, and imposed $59,000 in civil
penalties.