Export Controls: Clarification of Jurisdiction for Missile	 
Technology Items Needed (09-OCT-01, GAO-02-120).		 
								 
The U.S. government has long been concerned about the growing	 
threat from the proliferation of missiles and related		 
technologies that can deliver weapons of mass destruction. The	 
United States is working with other countries through the Missile
Technology Control Regime to control the export of		 
missile-related items. The Departments of Commerce and State	 
share primary responsibility for controlling exports of Regime	 
items. The Commerce Department is required to control Regime	 
items that are dual-use on its export control list--the Commerce 
Control List. All other Regime items are to be controlled by the 
State Department on its export control list--the U.S. Munitions  
List. However, the two departments have not clearly established  
which of them has jurisdiction for almost 25 percent of the items
the United States agreed to control. The Departments disagree on 
how to determine which Regime items are Commerce		 
Department-controlled and which are State Department-controlled. 
Consultations between the departments about respective control	 
lists have not been effective in resolving these jurisdiction	 
issues. Unclear jurisdiction may result in the same Regime item  
being subject to different export control restrictions and	 
processes at the two departments.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-120 					        
    ACCNO:   A02224						        
  TITLE:     Export Controls: Clarification of Jurisdiction for       
Missile Technology Items Needed 				 
     DATE:   10/09/2001 
  SUBJECT:   Defense capabilities				 
	     Dual-use technologies				 
	     Export regulation					 
	     Foreign governments				 
	     Foreign military sales policies			 
	     Foreign trade policies				 
	     Interagency relations				 
	     International relations				 
	     International trade restriction			 
	     Munitions						 
	     Technology transfer				 
	     U.S. Munitions List				 
	     Dept. of Commerce Control List			 

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GAO-02-120
     
Report to the Subcommittee on Readiness and Management Support, Committee on
Armed Services, U. S. Senate

United States General Accounting Office

GAO

October 2001 EXPORT CONTROLS Clarification of Jurisdiction for Missile
Technology Items Needed

GAO- 02- 120

Page i GAO- 02- 120 Export Controls Letter 1

Results in Brief 2 Background 3 Export Control Jurisdiction Unclear for
Certain Missile Technology

Control Regime Items 5 Disagreement Over Definitions and Lack of Effective
Consultation

Have Contributed to Unclear Jurisdiction for Regime Items 7 Unclear
Jurisdiction for Regime Items May Have Consequences for

U. S. National Interests and Exporters 9 Conclusions 12 Recommendations for
Executive Action 12 Agency Comments and Our Evaluation 13 Scope and
Methodology 13

Appendix I Missile Technology Control Regime Items Subject to Unclear
Jurisdiction 16

Appendix II Comments From the Department of Commerce 23

Appendix III Comments From the Department of State 32

Tables

Table 1: Examples of Regime Items on Both the Commerce Control List and the
State Department?s U. S. Munitions List 6 Table 2: Control of Regime Items
by Both the Departments of

Commerce and State 16 Contents

Page 1 GAO- 02- 120 Export Controls

October 9, 2001 The Honorable Daniel K. Akaka Chairman The Honorable James
M. Inhofe Ranking Minority Member Subcommittee on Readiness and

Management Support Committee on Armed Services United States Senate

The U. S. government has long been concerned about the growing threat to U.
S. interests from the proliferation of missiles, their components, and
related technologies. These missiles can deliver chemical, biological, and
nuclear weapons of mass destruction. In an effort to address these concerns,
the United States has committed to work with other countries through the
Missile Technology Control Regime to control the export of missile- related
items. With the passage of the National Defense Authorization Act for Fiscal
Year 1991, the Congress amended existing export control statutes to
strengthen missile- related export controls, consistent with the U. S.
government?s commitments to the Regime. 1 Under the amended statutes, the
Departments of Commerce and State share primary responsibility for
controlling exports of Regime items. The Commerce Department is required to
control Regime items that are dualuse (those having both military and
civilian uses) on its export control list- the Commerce Control List. All
other Regime items are to be controlled by the State Department on its
export control list- the U. S. Munitions List.

Given the current interest in missile technology proliferation and export
controls, you asked us to determine whether the Departments of Commerce and
State have clearly established which Department has jurisdiction over
Missile Technology Control Regime items. Specifically, we identified the two
Departments? division of jurisdiction over Regime items, the factors that
contribute to unclear jurisdiction for these items, and the potential
effects of unclear jurisdiction over these items.

1 P. L. 101- 510, Nov. 5, 1990.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 120 Export Controls

The Departments of Commerce and State have not clearly established which
Department has jurisdiction for almost 25 percent of the items the United
States agreed to control as part of its Missile Technology Control Regime
commitments. 2 In some cases, the descriptions of the Regime items on the
Commerce Control List and the U. S. Munitions List are the same. In other
cases, one Department claims jurisdiction over items that do not explicitly
appear on its export control list but do appear on the other Department?s
list.

Two factors contribute to unclear jurisdiction for Regime items. First, the
Departments of Commerce and State disagree on how to determine which Regime
items are Commerce Department- controlled and which are State Department-
controlled. Commerce Department officials said a Regime item appearing on
both export control lists should be State Departmentcontrolled only if it
meets the criteria of being specifically designed or modified for a military
application. The State Department disagreed with this position by stating
that an item is State Department- controlled if it appears on the U. S.
Munitions List and that exporters should not use any other criteria to
determine jurisdiction. Second, consultations between the Departments of
Commerce and State regarding their respective control lists have not been
effective in ensuring that Regime items are subject to the jurisdiction of
only one Department. The State Department office responsible for maintaining
the U. S. Munitions List has not participated in these consultations.
Furthermore, the State Department has not updated the Regime section of its
export control list for several years, which has limited opportunities for
consultations.

Unclear jurisdiction may result in the same Regime item being subject to
different export control restrictions and processes at the Departments of
Commerce and State, which could affect U. S. national interests and
companies? ability to export. For example, by law, the State Department
generally cannot allow missile technology and other items it controls to be
exported to China, while this same restriction does not apply to the
Commerce Department. Therefore, a company generally cannot export a Regime
item to China under the State Department?s export control system but may be
able to do so through the Commerce Department?s system after meeting certain
requirements. Because of differences between the

2 We previously reported on unclear lines of jurisdiction for stealth-
related commodities and technologies, which are Regime items. See Export
Controls: Concerns Over StealthRelated Exports (GAO/ NSIAD- 95- 140, May 10,
1995). Results in Brief

Page 3 GAO- 02- 120 Export Controls

two Departments? export control systems, it is critical that exporters
properly determine which Department has jurisdiction over Regime items.
However, some of the exporters we spoke with did not fully understand the
export control system or certain terms in the regulations thereby making it
sometimes difficult to determine where to apply for a license to export
Regime items.

To ensure that proposed exports of Regime items are subject to the
appropriate review process as determined by the U. S. government, we are
recommending that the Departments of Commerce and State resolve their
jurisdictional lines of control for Regime items and revise their
regulations accordingly. In commenting on a draft of this report, the
Commerce Department stated that, although it believes jurisdiction for
Regime items is generally clear, it supports reviewing the export control
lists to provide additional clarity for exporters. In its comments, the
State Department agreed to update its regulations and work with the Commerce
Department to eliminate areas of overlap in jurisdiction for Regime items.

The United States along with six allies established the Missile Technology
Control Regime (MTCR) in 1987. 3 The Regime is a voluntary agreement among
member countries to limit the proliferation of missiles capable of
delivering nuclear, biological, and chemical weapons and their associated
equipment and technology. The Regime consists of common export policy
guidelines and a list of controlled items that include complete missile
systems (rocket and unmanned air vehicle systems) and missile- related
components and technologies that may have civilian applications. The list,
known as the Equipment, Software, and Technology Annex (hereafter, referred
to as the Regime Annex), is periodically updated to reflect technological
advances. Member countries agree to control exports of Regime items in
accordance with their respective national laws. 4

The United States fulfills its MTCR commitments primarily through the export
control systems of the Departments of Commerce and State. These two systems
were founded on different premises. The Commerce

3 The other founding members of the Regime are Canada, France, Germany,
Italy, Japan, and the United Kingdom. Since 1987, 26 additional countries
have become members of the Regime, bringing the total number of member
countries to 33.

4 Throughout this report, the phrase ?Regime item? refers to the equipment,
facilities, components, materials, software, and technologies listed in the
Regime Annex. Background

Page 4 GAO- 02- 120 Export Controls

Department, through its Bureau of Export Administration, controls exports of
most dual- use items and technologies under the authority of the Export
Administration Act of 1979. 5 As such, the Commerce Department is charged
with weighing U. S. economic and trade interests along with national
security and foreign policy interests. Dual- use items subject to the
Commerce Department?s export controls are identified in the Commerce Control
List of the Export Administration Regulations. 6 In contrast, the State
Department, through its Office of Defense Trade Controls, controls exports
of defense articles and services under the authority of the Arms Export
Control Act. 7 The State Department?s export control system is designed
primarily to further national security and foreign policy interests. The
items controlled by the State Department can be found in the International
Traffic in Arms Regulations, specifically within the U. S. Munitions List,
which the State Department develops with the concurrence of the Department
of Defense. 8 The Departments of State and Defense are reviewing and
revising different portions of the U. S. Munitions List on an annual basis,
as part of the Defense Trade Security Initiative, to ensure that coverage of
items on the list is appropriate. 9 Exporters are responsible for
determining whether an item they seek to export is on the Commerce Control
List and, therefore, subject to the Commerce Department?s jurisdiction, or
on the U. S. Munitions List and subject to the State Department?s
jurisdiction.

With the passage of the National Defense Authorization Act for Fiscal Year
1991, the Congress amended both the Export Administration Act and the Arms
Export Control Act to include restrictions on the export of Regime items.
Under the amended Export Administration Act, the Secretary of Commerce, in
consultation with the Secretaries of State and Defense and other officials,
is required to establish and maintain as part of the Commerce Control List,
a list of all dual- use goods and technologies that appear on the Regime
Annex. Under the amended Arms Export Control Act, the Secretary of State, in
consultation with the Secretary of Defense and others, is to establish and
maintain as part of the U. S.

5 50 U. S. C. App. secs. 2401 et seq. 6 15 C. F. R. secs. 730- 774. 7 22 U.
S. C. secs. 2751 et seq. 8 22 C. F. R. secs. 120- 130. 9 See Defense Trade:
Analysis of Support for Recent Initiatives (GAO/ NSIAD- 00- 191, Aug. 31,
2000).

Page 5 GAO- 02- 120 Export Controls

Munitions List, a list of Regime items that are not controlled under the
Export Administration Act. Thus, under these statutes, individual Regime
items are to be listed on either the Commerce Control List or the U. S.
Munitions List- but not both lists. The Commerce Control List identifies a
variety of controlled dual- use items, some of which are designated as being
controlled for missile technology reasons, and includes Regime items. In
contrast, the U. S. Munitions List contains a separate section that
identifies Regime items subject to the State Department?s jurisdiction. 10

Forty- seven of 196 Regime items appear subject to the export control
jurisdictions of both the Commerce Department and the State Department. 11
For these 47 items, either (1) the description of the item is the same on
both the Commerce Control List and the U. S. Munitions List or (2) one
Department claims jurisdiction over an item even though the item does not
explicitly appear on its export control list but does appear on the other
Department?s list. Appendix I contains descriptions of the 47 Regime items
and identifies where they are covered on the Commerce and State control
lists.

Table 1 provides examples of Regime items that appear on both export control
lists with either identical descriptions or overlapping performance
parameters.

10 22 C. F. R. sec. 121.16. 11 The MTCR Annex consists of 20 groupings of
items, which are divided into subitems. For the purpose of this report, we
counted 196 subitems as separate Regime items. Export Control

Jurisdiction Unclear for Certain Missile Technology Control Regime Items

Page 6 GAO- 02- 120 Export Controls

Table 1: Examples of Regime Items on Both the Commerce Control List and the
State Department?s U. S. Munitions List

Commerce Control List U. S. Munitions List

Bulk machinable silicon- carbide reinforced unfired ceramic, usable for nose
tips. Bulk machinable silicon- carbide reinforced

unfired ceramic usable for nose tips. Gyro- astro compasses and other
devices, other than those controlled by 7A004, a which derive position or
orientation by means of automatically tracking celestial bodies or
satellites and specially designed components therefor.

Instrumentation, navigation, and direction finding equipment and systems,
and associated production and test equipment as follows; and specially
designed components and software therefor: Gyro- astro compasses and other
devices which derive position or orientation by means of automatically
tracking celestial bodies or satellites. Software that processes post-
flight, recorded data, obtained from the systems controlled by 6A108.b, b
enabling determination of vehicle position throughout its flight path.

Precision tracking systems: Software which processes post- flight, recorded
data, enabling determination of vehicle position throughout its flight path.

a Export Control Classification Number 7A004 covers ?gyro- astro compasses,
and other devices which derive position or orientation by means of
automatically tracking celestial bodies or satellites, with an azimuth
accuracy of equal to or less (better) than 5 seconds of arc.? b Export
Control Classification Number 6A108.b controls precision tracking systems,
usable for missiles.

Neither the Commerce Control List nor the U. S. Munitions List provides
criteria to differentiate when these items are subject to the Commerce
Department?s jurisdiction and when they are subject to the State
Department?s jurisdiction. The Commerce Control List sometimes provides a
cross- reference to the U. S. Munitions List when the State Department
controls certain items meeting particular parameters. 12 However, Commerce
Department officials said that the Commerce Control List does not always
include such references because the regulations would become too voluminous.
The State Department?s control list generally does not indicate that an item
may be subject to the Commerce Department?s control since the U. S.
Munitions List is supposed to identify only those items subject to the State
Department?s jurisdiction.

12 According to Part 738.2( d) of the Commerce Department?s export control
regulations, the Commerce Control List includes cross- references if another
U. S. government department has export licensing authority over items
related to those controlled by the Commerce Department.

Page 7 GAO- 02- 120 Export Controls

In other cases, the State Department claims jurisdiction over software and
technologies related to missile production equipment and facilities,
although these items do not explicitly appear on the U. S. Munitions List.
These items, however, appear on the Commerce Control List.

Two factors have contributed to unclear jurisdiction for Regime items.
First, officials at the Departments of Commerce and State have expressed
different understandings of how to define which Regime items are Commerce
Department- controlled and which are State Departmentcontrolled. Second,
consultations between the Departments of Commerce and State on Regime-
related changes to their regulations have not ensured that items are clearly
subject to the jurisdiction of one Department or the other. The State
Department office responsible for maintaining the U. S. Munitions List has
not formally participated in reviews of proposed changes to the Commerce
Control List. Furthermore, the State Department has not updated the MTCR
section of the U. S. Munitions List since the mid- 1990s, precluding the
opportunity to consult with the Commerce Department.

Commerce Department officials said that jurisdiction for Regime items is
clear as long as an exporter follows the State Department?s regulation on
designating and determining defense articles and services. Referring to the
State Department?s regulations, Commerce Department officials said that if a
Regime item appears on both Departments? control lists, it should be subject
to the State Department?s jurisdiction if it

?Is specifically designed, developed, configured, adapted, or modified for a
military application, and (i) Does not have predominant civil applications,
and (ii) Does not have performance equivalent (defined by form, fit and
function) to those of an article or service used for civil applications; ?.?
13

Conversely, according to Commerce Department officials, if the item does not
meet these criteria- even if it appears in the MTCR section of the U. S.
Munitions List- it should be subject to the Commerce Department?s export
controls. However, a senior State Department official disagreed with the
Commerce Department officials? interpretation of the State Department?s
regulations. The official explained that the criteria cited by

13 22 C. F. R. sec. 120.3. Disagreement Over

Definitions and Lack of Effective Consultation Have Contributed to Unclear
Jurisdiction for Regime Items

Page 8 GAO- 02- 120 Export Controls

Commerce Department officials is used by the State Department, in
consultation with the Defense Department, to determine which items will
appear on the U. S. Munitions List and should not be used by exporters and
others to determine whether an item is subject to the State Department?s
export controls. Instead, exporters are to consult the U. S. Munitions List
to determine which Regime items are under the State Department?s
jurisdiction.

Consultations between the Departments of Commerce and State have been
limited. According to the Commerce Department, it coordinates its
regulations and proposed changes for the control of Regime items with the
Departments of State, Defense, and Energy and, therefore, these Departments
should be aware of which Regime items appear on the Commerce Control List.
However, officials from the State Department?s Office of Defense Trade
Controls, which maintains the U. S. Munitions List, said they are not
formally consulted to ensure that Regime items do not appear on both export
control lists. Within the State Department, the Bureau of Nonproliferation
formally reviews and comments on the Commerce Department?s regulations for
the control of Regime items. A senior Bureau official said that the review
is to ensure that Regime items are controlled, without concern for which
Department has jurisdiction.

Further, the State Department has not consulted with the Commerce Department
in recent years regarding the Regime items covered by its export control
list. According to a senior official with the Office of Defense Trade
Controls, the Commerce Department was provided an opportunity to review the
section of the U. S. Munitions List that identifies the Regime items subject
to the State Department?s controls before the section was added to the
International Traffic in Arms Regulations in 1994. However, this section of
the State Department?s regulations has not been updated or revised since
then to incorporate the periodic changes made to the Regime Annex. State
Department officials maintain that the U. S. Munitions List does not have to
be regularly revised to ensure that new items added to the Regime Annex are
controlled, as those items are already controlled under the U. S. Munitions
List?s broad categories. However, as a result of this lack of revision, the
Commerce Department has not been provided another opportunity to review and
comment on the Regime items covered by the U. S. Munitions List to ensure
that items do not appear on both export control lists.

Page 9 GAO- 02- 120 Export Controls

The appearance of an item on both the Commerce Control List and the U. S.
Munitions List and disagreements between the Departments over which one has
jurisdiction may result in the same Regime item being subject to different
restrictions and reviews, which may affect U. S. national interests and
companies? ability to export Regime items. While the Commerce Department?s
export control system seeks to balance U. S. national security and foreign
policy interests with economic interests, the State Department?s export
control system was designed to primarily further national security and
foreign policy interests. The differences in the underlying premises of the
two Department?s export control systems are reflected in their restrictions
on where Regime items can be exported and processes to review export
licensing applications.

A key difference between the Departments? export control systems is that
some sanctions and embargoes only apply to items on the U. S. Munitions List
and not to those on the Commerce Control List. For example, under U. S. law,
licenses cannot be issued for the export of most missile technology and
other items on the U. S. Munitions List to China. 14 As a result, the State
Department generally denies license applications involving the export of
items on the U. S. Munitions List to China. This same restriction does not
apply to items on the Commerce Control List. Missile technology items on the
Commerce Control List may be licensed for export to China provided that
certain legal requirements are met. 15

Additionally, the State Department generally denies license applications
involving exports of U. S. Munitions List items to Indonesia and Yugoslavia.
The Commerce Department does not have a comparable policy for exports of
Regime items to these countries. Because of these policy differences, the
State Department could deny a license to an exporter seeking to export a
Regime item to one of these countries, whereas the Commerce

14 P. L. 101- 246, Feb. 16, 1990. The statute permits licensing of some
systems and components specifically designed for inclusion in civil products
unless the President determines that the intended recipient is the military
or security forces of China. Also, under the statute, licensing of U. S.
Munitions List items for export to China is prohibited unless the President
reports to Congress that (1) China has achieved certain political and human
rights reforms or (2) it is in the U. S. national interest.

15 Section 1512 of P. L. 105- 261, Oct. 17, 1998, as amended, generally
permits the export of missile equipment or technology to China only after
the President certifies that the export is not detrimental to the U. S.
space launch industry and the missile equipment or technology will not
measurably improve China's missile or space launch capabilities. This
restriction applies to the export of all missile equipment or technology on
the Regime Annex, except inertial reference units and components in manned
civilian aircraft. Unclear Jurisdiction

for Regime Items May Have Consequences for U. S. National Interests and
Exporters

Page 10 GAO- 02- 120 Export Controls

Department could approve a license to export the same item to these
countries.

Other sanctions apply to both export control lists, but the Departments have
enforced these sanctions differently. For example, under the MTCR sanction
provisions of the Export Administration Act and the Arms Export Control Act,
the President generally is to impose sanctions on U. S. and foreign parties
who improperly transferred Regime items. 16 For the improper transfer of
Regime- controlled components, equipment, material, and technology, the
Departments of Commerce and State are to deny export licenses to the
involved parties for all Regime items subject to their respective controls
for a 2- year period. 17 In applying MTCR sanctions, the Commerce Department
has allowed Regime items to be exported to sanctioned parties if these items
were incorporated into larger items not subject to these sanctions. The
State Department, however, has prohibited the export to sanctioned parties
of non- Regime items on the U. S. Munitions List if they contain Regime
items. As a result, exporters have been subject to different levels of
scrutiny and restrictions at the Departments of Commerce and State.

Finally, the Commerce Department?s regulations do not require licenses for
the export of Regime items on the Commerce Control List to Canada, while the
Department of State?s regulations require licenses for the export of Regime
items on the U. S. Munitions List to all countries. 18 The exporter
consulting the Commerce Control List could export an item to Canada without
a license, while the exporter consulting the U. S. Munitions List would have
to go through the Department of State?s license application process. The U.
S. government may or may not have an opportunity to review and approve a
Regime item exported to Canada, depending on whether the exporter consults
the Commerce Control List or the U. S. Munitions List.

16 The law allows the President to waive these sanctions under certain
conditions. The United States has imposed these sanctions in the past on
several countries including China, Egypt, India, Pakistan, and Russia.

17 For the improper transfer of Regime- controlled complete rocket systems
and unmanned air vehicle systems and their complete subsystems, the sanction
provisions call for the Departments of Commerce and State to deny export
licenses to the involved parties for all items on the Commerce Control List
and U. S. Munitions List for at least two years.

18 See Export Controls: Regulatory Change Needed to Comply with Missile
Technology Licensing Requirements (GAO- 01- 530, May 31, 2001).

Page 11 GAO- 02- 120 Export Controls

Because of differences in the export control systems of the Departments of
Commerce and State, it is critical that exporters properly determine whether
their items are controlled on the Commerce Control List or the U. S.
Munitions List. However, some of the companies we spoke with did not
understand U. S. export controls as applied to missile technology items. For
example, an official from one company stated the company?s product is not
exported for use in missiles and, therefore, did not understand why this
product is controlled for missile technology reasons, even though it is on
the Regime Annex. At another company, an official said that the State
Department controls all Regime items and did not realize that the Commerce
Department controls dual- use Regime items. Export licensing officials with
another company said that companies acquired by their company had
incorrectly determined that certain Regime items were Commerce Department-
controlled when the items were State Department- controlled. 19 An export
licensing official from another company stated that when there is
uncertainty as to which Department has jurisdiction over a particular Regime
item, the company submits the license application to the Commerce Department
with the expectation that the Commerce Department would send the license
application to the State Department if the item were State Department-
controlled. Officials from other companies said they relied on past
experience, familiarity with a particular Department, and their own
interpretations of the regulations when deciding where to submit an export
license application.

Some of the companies expressed uncertainty of the meaning of certain terms
in the regulations, which sometimes made it difficult to determine whether
to submit their license applications to the Commerce Department or the State
Department. For example, officials from several companies indicated that
they did not understand what the regulations mean when referring to items as
specifically designed or modified for a military application. These
officials noted that the Departments of Commerce and State do not provide
either a regulatory definition or sufficient guidance for what constitutes
being specifically designed or modified. As a result, an official with one
company said there is room for interpretation on the part of exporters.
Officials from these companies stated that if they make any modifications to
an item for use by the military, they submit the

19 According to the company officials, the acquired companies voluntarily
disclosed to the State Department that they had incorrectly exported certain
Regime items through the Commerce Department rather than the State
Department.

Page 12 GAO- 02- 120 Export Controls

license application to the State Department to ensure that they do not
violate the State Department?s regulations and governing statute.

The U. S. government has committed internationally to controlling Regime
items because of its concerns about the threat missile proliferation poses
to U. S. interests. The lack of clarity over which Department has
jurisdiction over some Regime items may lead an exporter to seek a Commerce
Department license for a militarily sensitive item controlled on the U. S.
Munitions List or a State Department license for a dual- use item controlled
on the Commerce Control List. The Commerce Department and State Department
would review these license applications according to different criteria and
restrictions and possibly reach different determinations on whether the item
may be exported. Because there is unclear jurisdiction for critical Regime
items, exporters are left to decide which Department should review their
exports and, by default, the policy interests that are to be considered and
acted upon.

To ensure that proposed exports of Missile Technology Control Regime items
are subject to the appropriate review process, we recommend that

 the Secretaries of Commerce and State direct the offices responsible for
the Commerce Control List and the U. S. Munitions List, in consultation with
others as appropriate, to jointly review the Regime Annex, determine the
appropriate jurisdiction for items on the Annex, and revise their respective
export control lists accordingly;

 the Secretary of Commerce ensure that, when a Regime item generally
controlled by the Commerce Department becomes subject to the State
Department?s control if it meets certain parameters, the Commerce Control
List specify those parameters and provide a cross- reference to the U. S.
Munitions List; and

 the Secretary of State update the section of the U. S. Munitions List that
identifies the Regime items subject to the State Department?s jurisdiction
to ensure that it is consistent with the current version of the Regime Annex
and provide a cross- reference to the Commerce Control List for those Regime
items that would be subject to the Commerce Department?s control when
certain parameters are met.

The annual review of the U. S. Munitions List, which is being conducted as
part of the Defense Trade Security Initiative, may provide a vehicle to
implement these recommendations. Conclusions

Recommendations for Executive Action

Page 13 GAO- 02- 120 Export Controls

In written comments on a draft of this report, the Commerce Department
concurred with our recommendation to review the Commerce Control List and
the U. S. Munitions List to provide additional clarity to exporters.
However, the Commerce Department commented that jurisdiction for Regime
items is generally clear and the current export control system is not a risk
to U. S. nonproliferation interests. The Commerce Department stated that it
refers its export license applications for Regime items to the State
Department and other agencies for their review. 20 According to the Commerce
Department, the State Department has an opportunity to indicate that an item
cannot be licensed under the Commerce Department because it is State
Department- controlled. However, making a jurisdiction determination during
the license review process delays the exporter from obtaining an approved
license from the appropriate Department. By clarifying the regulations, the
Departments would minimize such occurrences that can impact the workloads of
both the exporters and the U. S. government. The Commerce Department?s
comments are reprinted in appendix II, along with our evaluation of them.

In written comments on a draft of this report, the State Department
concurred with our recommendation to update the section of the U. S.
Munitions List that identifies the Regime items subject to the State
Department?s jurisdiction. The State Department said that, as part of this
update, it will work with the Commerce Department in an effort to eliminate
unclear jurisdiction for Regime items. According to the State Department,
the process of updating this section has already begun and should be
completed before the end of 2001. The State Department also provided
technical comments to clarify which Regime items are subject to its
jurisdiction and we revised the report to reflect those comments. The State
Department?s comments are reprinted in appendix III, along with our
evaluation of them.

To determine the division of jurisdiction over Regime items between the
Departments of Commerce and State, we compared the Regime Equipment,
Software, and Technology Annex of October 2000 with the January 2001
Commerce Control List and the April 2000 U. S. Munitions List (and
subsequent updates made to each list). We then confirmed with officials from
the Department of State?s Office of Defense Trade Controls

20 Executive Order 12981 grants authority for the Departments of State,
Defense, and Energy to review any license applications submitted to the
Commerce Department. Agency Comments

and Our Evaluation Scope and Methodology

Page 14 GAO- 02- 120 Export Controls

and the Department of Commerce?s Bureau of Export Administration the Regime
items that they claim as subject to their respective export controls.

To identify the factors that contribute to unclear jurisdiction for Regime
items, we interviewed officials with the Department of Defense?s Defense
Threat Reduction Agency, the Department of State?s Bureau of
Nonproliferation and Office of Defense Trade Controls, and the Department of
Commerce?s Bureau of Export Administration. We also reviewed Commerce
Department and State Department policies and practices for revising the
export control lists.

To identify the potential effects of unclear jurisdiction, we conducted
structured interviews with 24 companies that export Regime items to discuss
how they determine which Department controls their exports of Regime items
and how they are affected by differences in the export control systems.
These companies were selected on the basis of the number of license
applications for the export of Regime items they had submitted to either the
Commerce Department or the State Department from fiscal year 1997 through
fiscal year 2000. We also interviewed officials with the Department of
Defense?s Defense Threat Reduction Agency, the Department of State?s Bureau
of Nonproliferation and Office of Defense Trade Controls, and the Department
of Commerce?s Bureau of Export Administration. Additionally, we reviewed our
prior reports and reports from the Inspectors General of the Departments of
Defense and Commerce.

We conducted our review from January through July 2001 in accordance with
generally accepted government auditing standards.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of this report until 30
days after its issuance. At that time, we will send copies to the Chairmen
and Ranking Minority Members of the Senate Committee on Banking, Housing,
and Urban Affairs; Senate Committee on Foreign Relations; House Committee on
International Relations; House Committee on Armed Services; the Secretaries
of Commerce, Defense, and State; the Director, Office of Management and
Budget; and the Assistant to the President for National Security Affairs. We
will also make the report available to others upon request.

If you or your staff have questions concerning this report, please contact
me at (202) 512- 4841. Others making key contributions to this report were

Page 15 GAO- 02- 120 Export Controls

Thomas J. Denomme, Anne- Marie Lasowski, Johana R. Ayers, Richard K. Geiger,
and John Van Schaik.

Katherine V. Schinasi Director Acquisition and Sourcing Management

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 16 GAO- 02- 120 Export Controls

Forty- seven of the 196 items listed in the Missile Technology Control
Regime (MTCR) Equipment, Software, and Technology Annex appear subject to
the export control jurisdictions of both the Departments of Commerce and
State. These 47 Regime items are described in table 2, along with an
identification of where they are controlled on the Commerce Control List and
the State Department?s U. S. Munitions List.

In some cases, Regime items are described on both export control lists with
either identical or overlapping performance parameters. For these items, we
have identified the category and Export Control Classification Number where
they appear on the Commerce Control List and the category where they appear
on the U. S. Munitions List. The remaining items, which are software and
technologies related to Regime production facilities and equipment, have
been claimed by Department of State officials as subject to the State
Department?s jurisdiction, although the items do not explicitly appear on
the U. S. Munitions List but do appear on the Commerce Control List. For
these items, we have indicated on the table where State Department officials
claim these items are controlled on the U. S. Munitions List and where they
appear on the Commerce Control List.

Table 2: Control of Regime Items by Both the Departments of Commerce and
State Description of MTCR Item a Commerce Control List Category

(Export Control Classification Number) U. S. Munitions List Category
(Number)

1. Software specially designed or modified for the use of missile b
production facilities Propulsion Systems, Space Vehicles, and

Related Equipment (9D101) State officials claim this item is categorized as
Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes,
Bombs, and Mines (Category IV) and Aircraft and Associated Equipment
(Category VIII) 2. Technology for the development,

production, or use of missile production facilities and specially designed
or modified software for the use of those facilities

Propulsion Systems, Space Vehicles, and Related Equipment (9E001, 9E002, and
9E102)

State officials claim this item is categorized as Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category
IV) and Aircraft and Associated Equipment (Category VIII) 3. Software
specially designed or modified

for the use of missile subsystem c production facilities

Propulsion Systems, Space Vehicles, and Related Equipment (9D101) State
officials claim this item is

categorized as Launch Vehicles, Guided Missiles, Ballistic Missiles,
Rockets, Torpedoes, Bombs, and Mines (Category IV) 4. Software specially
designed or modified

for the use of thrust vector control systems d

Propulsion Systems, Space Vehicles, and Related Equipment (9D102) Launch
Vehicles, Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 17 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

5. Technology for the development, production, or use of missile subsystem
production equipment and facilities, software for the use of those
facilities, and software for thrust vector control subsystems

Propulsion Systems, Space Vehicles, and Related Equipment (9E001, 9E002, and
9E102)

State officials claim this item is categorized as Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category
IV)

6. Liquid and slurry propellant (including oxidizers) control systems, and
specially designed components, usable in missiles, designed or modified to
operate in vibration environments of more than 10 g RMS between 20 Hz and 2
kHz

Propulsion Systems, Space Vehicles, and Related Equipment (9A106) Launch
Vehicles, Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV)

7. Software specially designed or modified for the use of production
facilities for propulsion equipment, assemblies, components, and materials
usable in missiles

Propulsion Systems, Space Vehicles, and Related Equipment (9D002 and 9D101)
State officials claim this item is

categorized as Launch Vehicles, Guided Missiles, Ballistic Missiles,
Rockets, Torpedoes, Bombs, and Mines (Category IV) and Aircraft and
Associated Equipment (Category VIII) 8. Software specially designed or
modified

for the use of lightweight turbojet and turbofan engines and of liquid and
slurry propellant control systems and specially designed components

Propulsion Systems, Space Vehicles, and Related Equipment (9D102) Launch
Vehicles, Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV) and
Aircraft and Associated Equipment (Category VIII) 9. Technology for the
development,

production, or use of liquid and slurry propellant control systems,
production equipment and facilities for the manufacture of propulsion
components, and software for the use of those facilities, lightweight
turbojet and turbofan engines, liquid and slurry propellant control systems

Propulsion Systems, Space Vehicles, and Related Equipment (9E001, 9E002,
9E101, and 9E102)

State officials claim this item is categorized as Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category
IV) and Aircraft and Associated Equipment (Category VIII)

10. Nitrogen dioxide/ dinitrogen tetroxide e Materials, Chemicals,
Microorganisms, and Toxins (1C111) Explosives, Propellants, Incendiary

Agents, and Their Constituents (Category V) 11. Triethylene glycol dinitrate
f Materials, Chemicals, Microorganisms,

and Toxins (1C111) Explosives, Propellants, Incendiary Agents, and Their
Constituents (Category V) 12. 2- Nitrodiphenylamine g Materials, Chemicals,
Microorganisms,

and Toxins (1C111) Explosives, Propellants, Incendiary Agents, and Their
Constituents (Category V) 13. Technology for the development,

production, or use of nitrogen dioxide/ dinitrogen tetroxide, triethylene
glycol dinitrate, and 2- Nitrodiphenylamine

Materials, Chemicals, Microorganisms, and Toxins (1E001 and 1E101)
Explosives, Propellants, Incendiary

Agents, and Their Constituents (Category V)

14. Software specially designed or modified for the use of propellant test
and production equipment for the production and handling of propellants and
chemicals

Materials, Chemicals, Microorganisms, and Toxins (1D102) State officials
claim this item is

categorized as Explosives, Propellants, Incendiary Agents, and Their
Constituents (Category V)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 18 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

15. Technology for the development, production, or use of propellant test
and production equipment

Materials, Chemicals, Microorganisms, and Toxins (1E001 and 1E101) State
officials claim this item is

categorized as Explosives, Propellants, Incendiary Agents, and Their
Constituents (Category V) 16. Resin impregnated fiber prepregs and

metal coated fiber preforms for composite structures, laminates, and
manufactures thereof, specially designed for use in missiles and their
complete subsystems, made either with organic matrix or metal matrix
utilizing fibrous or filamentary reinforcements having a specific tensile
strength greater than 7.62 x 10 4 m and a specific modulus greater than 3.18
x 10 6 m

Propulsion Systems, Space Vehicles, and Related Equipment (9A110) Launch
Vehicles, Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV) and
Auxiliary Military Equipment (Category XIII)

17. Fine grain recrystallized bulk graphites (with a bulk density of at
least 1. 72 g/ cm 3 measured at 15 C) having a particle size of 100 x 10 -6
m or less, usable for rocket nozzles and reentry vehicle nose tips usable in
missiles

Materials, Chemicals, Microorganisms, and Toxins (1C107) Launch Vehicles,
Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV) and
Auxiliary Military Equipment (Category XIII)

18. Pyrolytic or fibrous reinforced graphites usable for rocket nozzles and
reentry vehicle nose tips usable in missiles

Materials, Chemicals, Microorganisms, and Toxins (1C107) Launch Vehicles,
Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV) and
Auxiliary Military Equipment (Category XIII) 19. Ceramic composite materials
(dielectric

constant less than 6 at frequencies from 100 Hz to 10 GHz) for use in
radomes usable in missiles

Materials, Chemicals, Microorganisms, and Toxins (1C107) Launch Vehicles,
Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV)

20. Bulk machinable silicon- carbide reinforced unfired ceramic usable for
nose tips usable in missiles

Materials, Chemicals, Microorganisms, and Toxins (1C107) Launch Vehicles,
Guided Missiles,

Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV) 21.
Technology for the development,

production, or use of resin impregnated fiber prepregs, metal coated fiber
preforms, fine grain recrystallized bulk graphites, pyrolytic or fibrous
reinforced graphites, ceramic composite materials, and bulk machinable
silicon- carbide reinforced unfired ceramic

Materials, Chemicals, Microorganisms, and Toxins (1E001 and 1E101) and
Propulsion Systems, Space Vehicles, and Related Equipment (9E101 and 9E102)

Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes,
Bombs, and Mines (Category IV) and Auxiliary Military Equipment (Category
XIII)

22. Gyro- astro compasses and other devices which derive position or
orientation by means of automatically tracking celestial bodies or
satellites, and specially designed components

Navigation and Avionics (7A104) Spacecraft Systems and Associated Equipment
(Category XV)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 19 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

23. Accelerometers with a threshold of 0.05 g or less, or a linearity error
within 0.25% of full scale output, or both, which are designed for use in
inertial navigation systems or in guidance systems of all types and
specially designed components h

Navigation and Avionics (7A101) Aircraft and Associated Equipment (Category
VIII) and Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII)

24. All types of gyros usable in missiles, with a rated drift rate stability
of less than 0.5 degrees per hour in a 1 g environment and specially
designed components i

Navigation and Avionics (7A102) Aircraft and Associated Equipment (Category
VIII) and Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII) 25. Continuous output accelerometers or

gyros of any type, specified to function at acceleration levels greater than
100 g, and specially designed components

Navigation and Avionics (7A001 and 7A002) Fire Control, Range Finder,
Optical and

Guidance and Control Equipment (Category XII)

26. Software specially designed or modified for the use of gyro- astro
compasses, accelerometers, gyros, and production, test, calibration, and
alignment equipment deigned or modified to be used with equipment for
instrumentation, navigation, and direction finding

Navigation and Avionics (7D101) Aircraft and Associated Equipment (Category
VIII); Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII); and Spacecraft Systems and Associated Equipment
(Category XV)

27. Integration software specially designed for inertial or other equipment
using accelerometers or gyros and systems incorporating such equipment

Navigation and Avionics (7D102) Aircraft and Associated Equipment (Category
VIII) and Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII) 28. Technology for the development,

production, or use of gyro- astro compasses, accelerometers, gyros, related
production and test equipment, and related software

Navigation and Avionics (7E001, 7E002, and 7E101) Aircraft and Associated
Equipment

(Category VIII); Fire Control, Range Finder, Optical and Guidance and
Control Equipment (Category XII); and Spacecraft Systems and Associated
Equipment (Category XV) 29. Test, calibration, and alignment

equipment specially designed for hydraulic, mechanical, electro- optical, or
electromechanical flight control systems and attitude control equipment
designed or modified for missiles

Navigation and Avionics (7B001) State officials claim this item is
categorized as Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII)

30. Software specially designed or modified for the use of test,
calibration, and alignment equipment for flight and attitude control systems
and equipment

Navigation and Avionics (7D101) State officials claim this item is
categorized as Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII) 31. Technology for the development,

production, or use of test, calibration, and alignment equipment for flight
and attitude control systems and equipment and related software

Navigation and Avionics (7E001, 7E002, and 7E101) State officials claim this
item is

categorized as Fire Control, Range Finder, Optical and Guidance and Control
Equipment (Category XII)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 20 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

32. Design technology for protection of avionics and electrical subsystems
against electromagnetic pulse and electromagnetic interference hazards from
external sources as follows:

Design technology for shielding systems

Design technology for the configuration of hardened electrical circuits and
subsystems

Design technology for determination of hardening criteria for the above

Navigation and Avionics (7E102) Military Electronics (Category XI) 33.
Precision tracking systems, usable for

missiles as follows:

Tracking systems that use a code translator installed on the rocket or
unmanned air vehicle in conjunction with either surface or airborne
reference or navigation satellite systems to provide real- time measurements
of in- flight position and velocity

Range instrumentation radars including associated optical/ infrared trackers
with all of the following capabilities:

Angular resolution better than 3 mrad,

Range of 30 km or greater with a range resolution better than 10 m RMS, and

Velocity resolution better than 3 m/ s

Sensors and Lasers (6A108) Military Electronics (Category XI) 34. Software
that processes post- flight,

recorded data, enabling determination of vehicle position throughout its
flight path, specially designed or modified for missiles

Sensors and Lasers (6D103) Launch Vehicles, Guided Missiles, Ballistic
Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV)

35. Software specially designed or modified for the use of precision
tracking systems Sensors and Lasers (6D102) Military Electronics (Category
XI) 36. Technology for the development,

production, or use of precision tracking systems, software which processes
postflight recorded data, and software for precision tracking systems

Sensors and Lasers (6E001, 6E002, and 6E101) Launch Vehicles, Guided
Missiles,

Rockets, Torpedoes, Bombs, and Mines (Category IV) and Military Electronics
(Category XI)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 21 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

37. Analog computers, digital computers, or digital differential analyzers
designed or modified for use in missiles having any of the following
characteristics:

Rated for continuous operation at temperatures from below -45 C to above +55
C or

Designed as ruggedized or radiation hardened

Computers (4A101) Military Electronics (Category XI) 38. Technology for the
development,

production, or use of analog and digital computers and digital differential
analyzers

Computers (4E001) Military Electronics (Category XI) 39. Devices for reduced
observables such as

radar reflectivity, ultraviolet/ infrared signatures and acoustic signatures
(i. e., stealth technology), for applications usable in missiles and their
complete subsystems

Materials, Chemicals, Microorganisms, and Toxins (1C101) Auxiliary Military
Equipment

(Category XIII) 40. Systems specially designed for radar

cross section measurement usable for missiles and their complete subsystems
j

Sensors and Lasers (6B108) Military Electronics (Category XI) 41. Materials
for reduced observables such

as radar reflectivity, ultraviolet/ infrared signatures and acoustic
signatures (i. e., stealth technology), for applications usable for missiles
and their complete subsystems

Materials, Chemicals, Microorganisms, and Toxins (1C101) Auxiliary Military
Equipment

(Category XIII) 42. Software specially designed for reduced

observables such as radar reflectivity, ultraviolet/ infrared signatures and
acoustic signatures (i. e., stealth technology), for applications usable for
missiles and their complete subsystems

Materials, Chemicals, Microorganisms, and Toxins (1D103) Auxiliary Military
Equipment

(Category XIII) 43. Technology for the development,

production, or use of devices, materials, and software for reduced
observables, and systems for radar cross section measurement

Materials, Chemicals, Microorganisms, and Toxins (1E001, 1E002, 1E101, and
1E102) and Sensors and Lasers (6E001, 6E002, and 6E101)

Military Electronics (Category XI) and Auxiliary Military Equipment
(Category XIII)

44. Detectors specially designed or modified to protect rocket systems and
unmanned air vehicles against nuclear effects, and usable for missiles

Sensors and Lasers (6A102) Military Electronics (Category XI) 45. Technology
for the development,

production, or use of detectors Sensors and Lasers (6E001, 6E002, and 6E101)
Military Electronics (Category XI) 46. Software specially designed or
modified

for production facilities for complete subsystems usable in complete rocket
systems and unmanned air vehicles that are capable of a maximum range equal
to or greater than 300 km with payloads of less than 500 kg

Propulsion Systems, Space Vehicles, and Related Equipment (9D001, 9D002, and
9D101)

State officials claim this item is categorized as Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category
IV)

Appendix I: Missile Technology Control Regime Items Subject to Unclear
Jurisdiction

Page 22 GAO- 02- 120 Export Controls

Description of MTCR Item a Commerce Control List Category (Export Control
Classification Number) U. S. Munitions List Category

(Number)

47. Technology for the development, production or use of production
facilities and equipment for complete rocket systems and unmanned air
vehicles that are capable of a maximum range equal to or greater than 300 km
with payloads of less than 500 kg and software for those facilities

Propulsion Systems, Space Vehicles, and Related Equipment (9E001, 9E002, and
9E102)

State officials claim this item is categorized as Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category
IV)

a The descriptions of the MTCR items are based on the Missile Technology
Control Regime Equipment, Software, and Technology Annex. b For the purpose
of this appendix, missiles are defined as complete rocket and unmanned air
vehicle

systems capable of delivering at least a 500 kilogram (kg) payload to a
range of at least 300 kilometers (km).

c Complete subsystems include individual rocket stages, reentry vehicles,
rocket engines, and warhead arming and fusing mechanisms.

d Thrust vector control systems change the rocket?s thrust direction to
steer a missile. They are also used on advanced fighters and spacecraft.

e Nitrogen dioxide/ dinitrogen tetroxide is a liquid oxidizer that burns
fuel in rocket motors and engines and is also used as an agent in
agricultural chemicals and plastics.

f Triethylene glycol dinitrate is a nitrated plasticizer added to solid
rocket propellants to increase their burn rate and is also used in military
and commercial explosives.

g 2- Nitrodiphenylamine is an additive that reduces the decomposition of
rocket fuels and is also widely used throughout the ammunition industry.

h Accelerometers are used to measure the rate of change of speed in a given
direction and are used in missile guidance systems but are also used on
civilian and military aircraft and in electronic equipment and
manufacturing.

i Gyroscopes, or gyros, sense changes in orientation and are used in missile
guidance systems but are also used on commercial and military ships and
aircraft.

j Radar cross section measurement systems are needed to determine and reduce
the radar signature of a missile. They can also be adapted to measure
antenna performance patterns for commercial applications, including cell
phones and satellite dishes.

Appendix II: Comments From the Department of Commerce

Page 23 GAO- 02- 120 Export Controls

Appendix II: Comments From the Department of Commerce

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix II: Comments From the Department of Commerce

Page 24 GAO- 02- 120 Export Controls

See comment 1.

Appendix II: Comments From the Department of Commerce

Page 25 GAO- 02- 120 Export Controls

See comment 4. See comment 3.

See comment 2.

Appendix II: Comments From the Department of Commerce

Page 26 GAO- 02- 120 Export Controls

See comment 5.

Appendix II: Comments From the Department of Commerce

Page 27 GAO- 02- 120 Export Controls

See comment 6.

Appendix II: Comments From the Department of Commerce

Page 28 GAO- 02- 120 Export Controls

See comment 7.

Appendix II: Comments From the Department of Commerce

Page 29 GAO- 02- 120 Export Controls

See comment 9. See comment 8.

Appendix II: Comments From the Department of Commerce

Page 30 GAO- 02- 120 Export Controls

The following are GAO?s comments on the Commerce Department?s letter dated
September 13, 2001:

1. Text revised for clarification. 2. We believe the text reflects what
Commerce Department officials told

us during our review and is not substantively different than the Commerce
Department?s proposed change. We, therefore, do not believe a revision is
needed.

3. We did not revise the report to include a discussion of the license
review process. We believe that jurisdictional determinations should be made
before a company submits an export license application for review.
Clarification of the regulations would help ensure that a company submits
its license application for a Regime item to the appropriate Department.

4. Text revised. 5. As discussed in the report, the State Department did not
agree that

exporters should use the criteria contained in section 120.3 of the State
Department?s regulations to determine whether an item is subject to the
State Department?s export controls. In addition, the Commerce Department
refers to section 120.3 as containing the definition of a defense article.
However, the definition of a defense article appears in section 120.6 of the
State Department?s regulations. According to the definition in section
120.6, a defense article is any item or technical data designated on the U.
S. Munitions List.

6. We believe the text reflects what Commerce Department officials told us
during our review and is not substantively different than the Commerce
Department?s proposed change. We, therefore, do not believe a revision is
needed.

7. The Commerce Department?s example highlights the difference between how
the Departments of Commerce and State enforce sanctions. We do not believe
additional clarification is needed.

8. As discussed in the report, some of the exporters we spoke with did not
understand the export control system or certain terms in the regulations,
thereby making it sometimes difficult to determine where to apply for a
license to export Regime items. We point out in one GAO Comments

Appendix II: Comments From the Department of Commerce

Page 31 GAO- 02- 120 Export Controls

example that a company submits license applications to the Commerce
Department when uncertain as to which Department has jurisdiction, but do
not discuss how Commerce licensing officers respond in such a situation.

9. Text revised for clarification.

Appendix III: Comments From the Department of State

Page 32 GAO- 02- 120 Export Controls

Appendix III: Comments From the Department of State

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix III: Comments From the Department of State

Page 33 GAO- 02- 120 Export Controls

See comment 1.

Appendix III: Comments From the Department of State

Page 34 GAO- 02- 120 Export Controls

The following is GAO?s comment on the State Department?s letter dated
September 10, 2001:

1. We believe our draft report reflected information provided to us by State
Department officials during the course of our review. However, we have
revised the report to reflect the State Department?s position as indicated
in its comments. GAO Comment

(707550)

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