Nonproliferation: Improvements Needed for Controls on Exports of 
Cruise Missile and Unmanned Aerial Vehicle Technology (09-MAR-04,
GAO-04-493T).							 
                                                                 
Cruise missiles and unmanned aerial vehicles (UAV) pose a growing
threat to U.S. national security interests as accurate, 	 
inexpensive delivery systems for conventional, chemical, and	 
biological weapons. GAO assessed (1) the tools the U.S. and	 
foreign governments use to address proliferation risks posed by  
the sale of these items and (2) efforts to verify the end use of 
exported cruise missiles, UAVs, and related technology. 	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-493T					        
    ACCNO:   A09420						        
  TITLE:     Nonproliferation: Improvements Needed for Controls on    
Exports of Cruise Missile and Unmanned Aerial Vehicle Technology 
     DATE:   03/09/2004 
  SUBJECT:   Arms control agreements				 
	     Dual-use technologies				 
	     Export regulation					 
	     Foreign trade agreements				 
	     Foreign trade policies				 
	     Military aircraft					 
	     Missiles						 
	     Monitoring 					 
	     National preparedness				 
	     Unmanned aerial vehicles				 

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GAO-04-493T

United States General Accounting Office

GAO	Testimony Before the Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives

For Release on Delivery

Expected at 2:00 p.m. EST NONPROLIFERATION

Tuesday, March 9, 2004

Improvements Needed for Controls on Exports of Cruise Missile and Unmanned
                           Aerial Vehicle Technology

Statement of Joseph A. Christoff, Director International Affairs and Trade

GAO-04-493T

Highlights of GAO-04-493T, testimony before the Subcommittee on National
Security, Emerging Threats, and International Relations, Committee on
Government Reform, House of Representatives

Cruise missiles and unmanned aerial vehicles (UAV) pose a growing threat
to U.S. national security interests as accurate, inexpensive delivery
systems for conventional, chemical, and biological weapons. GAO assessed
(1) the tools the U.S. and foreign governments use to address
proliferation risks posed by the sale of these items and (2) efforts to
verify the end use of exported cruise missiles, UAVs, and related
technology.

The Secretary of Commerce should assess and report to Congress on the
adequacy of an export regulation provision to address missile
proliferation by nonstate actors and on ways the provision might be
modified to address a gap in U.S. export control authority.

The Secretaries of State, Commerce, and Defense each should complete a
comprehensive assessment of cruise missile, UAV, and related dual-use
transfers to determine if U.S. exporters and foreign end users comply with
conditions related to the transfers.

Commerce and Defense partially agreed with the recommendations. State
disagreed to complete an assessment, but said it would pay special
attention to the need for more checks on cruise missile and UAV transfers.

www.gao.gov/cgi-bin/getrpt?GAO-04-493T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Joseph A. Christoff at (202)
512-8979 or [email protected].

Tuesday, March 9, 2004

NONPROLIFERATION

Improvements Needed for Controls on Exports of Cruise Missile and Unmanned
Aerial Vehicle Technology

The growing threat to U.S. national security of cruise missile and UAV
proliferation is challenging the tools the United States has traditionally
used. Multilateral export control regimes have expanded their lists of
controlled technologies that include cruise missile and UAV items, but key
countries of concern are not members. U.S. export control authorities find
it increasingly difficult to limit or track unlisted dual-use items that
can be acquired without an export license. Moreover, a gap in U.S. export
control authority enables American companies to export certain dual-use
items to recipients that are not associated with missile projects or
countries listed in the regulations, even if the exporter knows the items
might be used to develop cruise missiles or UAVs. American companies have
in fact legally exported dual-use items with no U.S. government review to
a New Zealand resident who bought the items to build a cruise missile.

The U.S. government seldom uses its end-use monitoring programs to verify
compliance with conditions placed on the use of cruise missile, UAV, or
related technology exports. For example, State officials do not monitor
exports to verify compliance with license conditions on missiles or other
items, despite legal and regulatory requirements to do so. Defense has not
used its end-use monitoring program initiated in 2002 to check the
compliance of users of more than 500 cruise missiles exported between
fiscal years 1998 and 2002. Commerce conducted visits to assess the end
use of items for about 1 percent of the 2,490 missile-related licenses we
reviewed. Thus, the U.S. government cannot be confident that recipients
are effectively safeguarding equipment in ways that protect U.S. national
security and nonproliferation interests.

A Chinese SILKWORM Cruise Missile in Iraq

Mr. Chairman and Members of the Committee,

I am pleased to be here today to discuss GAO's report1 on U.S. efforts to
limit the proliferation of cruise missiles and unmanned aerial vehicles
(UAV). These efforts are complicated by the widespread availability of
these items among countries of concern.2 The U.S. government faces
tradeoffs when making decisions about transfers of cruise missiles, UAVs,
or related technology. The United States wants to prevent the
proliferation of these weapons systems to countries of concern and
terrorists. At the same time, the U.S. government has an interest in
encouraging transfers of cruise missiles and UAVs to U.S. allies to
support regional security and bilateral relations. The U.S. government
also wants to use these sales to help maintain the health of the U.S.
defense industrial base.

You asked us to assess U.S. and international efforts to limit the
proliferation of cruise missiles, unmanned aerial vehicles, and related
technology. Specifically, we assessed (1) the nature and extent of cruise
missile and UAV proliferation; (2) the nonproliferation tools that the
United States uses to address the proliferation risks posed by the sale of
these items; and (3) U.S. and other governments' efforts to verify the end
use of exported cruise missiles, UAVs, and related technology.

To address these issues, we reviewed analyses prepared by the Departments
of State, Commerce, Defense, and Homeland Security, and the U.S.
intelligence community, as well as studies prepared by nonproliferation
experts. We also reviewed multilateral export control regime3
documentation; met with representatives of the Missile Technology Control
Regime (MTCR) in Paris, France; and interviewed government officials in
France, Italy, and the United Kingdom. Furthermore, we analyzed export
licensing information from the

1U.S. General Accounting Office, Nonproliferation: Improvements Needed to
Better Control Technology Exports for Cruise Missiles and Unmanned Aerial
Vehicles, GAO-04-175 (Washington, D.C.: Jan. 23, 2004).

2Countries of missile proliferation concern listed in the Export
Administration Regulations are Bahrain, China, Egypt, India, Iran, Iraq,
Israel, Jordan, Kuwait, Lebanon, Libya, Macau, North Korea, Oman,
Pakistan, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen.

3Multilateral export control regimes are voluntary, nonbinding
arrangements among likeminded supplier countries that aim to restrict
trade in sensitive technologies to peaceful purposes. Regime members agree
to restrict such trade through their national laws and regulations, which
set up systems to license the exports of sensitive items.

Departments of State, Commerce, and Defense on exports of cruise missiles,
UAVs, and related dual-use technology that have both military and civilian
applications.

Summary In summary, we found that

o  	Cruise missiles and UAVs pose a growing threat to U.S. national
security interests as accurate and inexpensive delivery systems for
conventional, chemical, and biological weapons. Conventional anti-ship
cruise missiles pose an immediate threat to U.S. naval vessels because of
the widespread availability of these weapons worldwide. At least 70
nations currently possess some type of anti-ship missiles armed with
conventional, high explosive warheads, and at least 32 nations are
developing or manufacturing more than 250 models of UAVs. Landattack
cruise missiles pose a future threat to the U.S. homeland because of the
anticipated growth in the availability of these more accurate,
longer-range systems. The widespread availability of commercial items,
such as global positioning systems and lightweight engines, has made it
easier for countries and terrorists to acquire or build at least
rudimentary cruise missile or UAV systems.

o  	The United States primarily uses multilateral export control regimes
and national export controls among other tools to address the threat
associated with cruise missile and UAV proliferation. Between 1997 and
2002, multilateral export control regimes have added cruise missile and
UAV-related items to their control lists, thereby committing regime
members to provide greater scrutiny to these items before licensing them
for export. However, nonmembers such as China and Israel continue to
acquire, develop, and export cruise missile or UAV technology. This
growing capability of nonmember supplier countries to develop technologies
used for weapons of mass destruction and trade them with other countries
of proliferation concern undermines the regimes' ability to impede
proliferation. In addition, the United States faces limitations in
applying national export controls. First, the U.S. government finds it
difficult to identify and track widely available dual-use items that are
not on control lists but that can be used for cruise missile and UAV
proliferation purposes. Second, a gap in U.S. catch-all control
regulations4 enabled American companies to legally

4Catch-all controls are controls that authorize a government to require an
export license for items that are not on control lists but that are known
or suspected of being intended for use in a missile or weapons of mass
destruction (WMD) program.

export dual-use items to a New Zealand resident who bought the items to
show how a terrorist could legally build a cruise missile.

o  	The U.S. government uses post-shipment verification (PSV) visits as a
key tool available to confirm that the recipients of sensitive U.S.
technologies are using them in accordance with license conditions.
However, of 786 licenses for cruise missile and UAV technology that the
Department of State issued between fiscal years 1998 and 2002, it
conducted verification visits on only 4 licenses. The Department of
Defense conducted no monitoring over more than 500 cruise missiles and
related items that it transferred to other countries between fiscal years
1998 and 2002. The Department of Commerce conducted verification visits on
1 percent of nearly 2,500 missile-related licenses issued between fiscal
years 1998 to 2002.

We are recommending that the Secretary of Commerce assess and report to
Congress on the adequacy of the export control regulations' catch-all
provision to address missile proliferation by nonstate actors and on ways
the provision might be modified. We are also recommending that the
Secretaries of State, Commerce, and Defense each complete a comprehensive
assessment of the nature and extent of compliance with license conditions
on cruise missiles, UAVs, and related dual-use technology. Commerce and
Defense partially agreed with the recommendations. State disagreed to
complete an assessment, but said it would pay special attention to the
need for more checks on cruise missile and UAV transfers.

Distinctions between cruise missiles and UAVs are becoming blurred as the
militaries of many nations, in particular the United States, attach
missiles to traditional reconnaissance UAVs and develop UAVs dedicated to
combat missions. A UAV, a pilotless vehicle that operates like an
airplane, can be used for a variety of military and commercial purposes.
UAVs are available in a variety of sizes and shapes, propeller-driven or
jet propelled, and can be straight-wing aircraft or have tilt-rotors like
helicopters. They can be as small as a model aircraft or as large as a U-2
manned reconnaissance aircraft. A cruise missile is an unmanned aerial
vehicle designed for one-time use, which travels through the air like an
airplane before delivering its payload. A cruise missile consists of four
major components: a propulsion system, a guidance and control system, an
airframe, and a payload. The technology for the engine, the autopilot, and
the airframe could be similar for both cruise missiles and UAVs, according
to a 2000 U.S. government study of cruise missiles.

  Background

Cruise missiles provide a number of military capabilities. For example,
they present significant challenges for air and missile defenses. Cruise
missiles can fly at low altitudes to stay below radar and, in some cases,
hide behind terrain features. Newer missiles are incorporating stealth
features to make them less visible to radars and infrared detectors.
Furthermore, land-attack cruise missiles may fly circuitous routes to get
to their targets, thereby avoiding radar and air defense installations.

U.S. policy on the proliferation of cruise missiles and UAVs is expressed
in U.S. commitments to the MTCR and Wassenaar Arrangement. These
multilateral export control regimes are voluntary, nonbinding arrangements
among like-minded supplier countries that aim to restrict trade in
sensitive technologies. Regime members agree to restrict such trade
through their national laws and regulations, which set up systems to
license the exports of sensitive items. The four principal regimes are the
MTCR; the Wassenaar Arrangement, which focuses on trade in conventional
weapons and related items with both civilian and military (dual-use)
applications; the Australia Group, which focuses on chemical and
biological technologies; and the Nuclear Suppliers Group, which focuses on
nuclear technologies. The United States is a member of all four regimes.
Regime members conduct a number of activities in support of the regimes,
including (1) sharing information about each others' export licensing
decisions, including certain export denials and, in some cases, approvals
and (2) adopting common export control practices and control lists of
sensitive equipment and technology into national laws or regulations.

Exports of commercially supplied American-made cruise missiles, military
UAVs, and related technology are transferred pursuant to the Arms Export
Control Act, as amended, and the International Trafficking in Arms
Regulations, implemented by State. Government-to-government transfers are
made pursuant to the Foreign Assistance Act of 1961, as amended, and are
subject to DOD guidance. Exports of dual-use technologies related to
cruise missiles and UAVs5 are transferred pursuant to the Export

5Related items include technical data, subcomponents, and spare parts.

Administration Act of 1979, as amended,6 and the Export Administration
Regulations,7 implemented by Commerce.

The Arms Export Control Act, as amended in 1996, requires the President to
establish a program for end-use monitoring of defense articles and
services sold or exported under the provisions of the act and the Foreign
Assistance Act.8 This requirement states that, to the extent practicable,
end-use monitoring programs should provide reasonable assurance that
recipients comply with the requirements imposed by the U.S. government on
the use, transfer, and security of defense articles and services. In
addition, monitoring programs, to the extent practicable, are to provide
assurances that defense articles and services are used for the purposes
for which they are provided. The Export Administration Act, as amended,
provides the Department of Commerce with the authority to enforce dualuse
controls. Under the act, Commerce is authorized to conduct PSV visits
outside the United States of dual-use exports.9

Although cruise missiles and UAVs provide important capabilities for the
United States and its friends and allies, in the hands of U.S. adversaries
they pose substantial threats to U.S. interests. First, anti-ship cruise
missiles threaten U.S. naval forces deployed globally. We reported in 2000
that the next generation of anti-ship cruise missiles-most of which are
now expected to be fielded by 2007-will be equipped with advanced target
seekers and stealthy design.10 These features will make them more
difficult to detect and defeat. At least 70 nations possess some type of
cruise missile, mostly short-range, anti-ship missiles armed with
conventional, high-explosive warheads, according to a U.S. government
study. Countries that export cruise missiles currently include China,
France, Germany, Israel, Italy, Norway, Russia, Sweden, United Kingdom,
and the United States. China and Russia have sold cruise missiles to Iran,

  Proliferation of Cruise Missiles and UAVs Poses a Growing Threat to U.S.
  National Security Interests

650 U.S.C. app. S:S: 2401 and following. Executive Order 13222, 66 Fed.
Reg. 44025 and subsequent presidential notices continue the export control
regime established under the act and the Export Administration
Regulations.

715 C.F.R. S:S: 730-774.

822 U.S.C. S: 2785.

950 U.S.C. app S: 2411(a)(1).

10U.S. General Accounting Office, Defense Acquisitions: Comprehensive
Strategy Needed to Improve Ship Cruise Missile Defense, GAO-NSIAD-00-149
(Washington, D.C.: July 2000).

Iraq, Libya, North Korea, and Syria. Nations that manufacture but do not
yet export cruise missiles currently include Brazil, India, Iran, Iraq,
North Korea, South Africa, and Taiwan. None of these nonexporting
manufacturing countries is a member of the Wassenaar Arrangement, and only
Brazil and South Africa are in the MTCR.

Second, land-attack cruise missiles have a potential in the long-term to
threaten the continental United States and U.S. forces deployed overseas.
Various government and academic studies have raised concerns that the wide
availability of commercial items, such as global positioning system
receivers and lightweight engines, allows both countries and nonstate
actors to enhance the accuracy of their systems, upgrade to greater range
or payload capabilities, and convert certain anti-ship cruise missiles
into land-attack cruise missiles. Although not all cruise missiles can be
modified into land-attack cruise missiles because of technical barriers,
specific cruise missiles can and have been. For example, a 1999 study
outlined how the Chinese Silkworm anti-ship cruise missile had been
converted into a land-attack cruise missile.11 Furthermore, the Iraq
Survey Group reported in October 2003 that it had discovered 10 Silkworm
antiship cruise missiles modified to become land-attack cruise missiles
and that Iraq had fired 2 of these missiles at Kuwait. According to an
unclassified national intelligence estimate,12 several countries are
technically capable of developing a missile launch mechanism to station on
forward-based ships or other platforms to launch land-attack cruise
missiles against the United States.

Finally, UAVs represent an inexpensive means of launching chemical and
biological attacks against the United States and allied forces and
territory. For example, the U.S. government reported its concern over this
threat in various meetings and studies. The Acting Deputy Assistant
Secretary of State for Nonproliferation testified in June 2002 that UAVs
are potential delivery systems for WMD, and are ideally suited for the
delivery of chemical and biological weapons given their ability to
disseminate aerosols in appropriate locations at appropriate altitudes. He
added that,

11Feasibility of Third World Advanced Ballistic and Cruise Missile Threat,
Volume 2: Emerging Cruise Missile Threat, Systems Assessment Group;
National Defense Industrial Association Strike, Land-Attack and Air
Defense Committee (Washington, D.C.: August 1999).

12Foreign Missile Developments and the Ballistic Missile Threat Through
2015, Unclassified Summary of a National Intelligence Estimate, National
Intelligence Council (Washington, D.C.: December 2001).

although the primary concern has been that nation-states would use UAVs to
launch WMD attacks, there is potential for terrorist groups to produce or
acquire small UAVs and use them for chemical or biological weapons
delivery.

  Key Nonproliferation Tools Have Limitations Addressing Cruise Missile and UAV
  Proliferation

The U.S. government generally uses two key nonproliferation
tools-multilateral export control regimes and national export controls-to
address cruise missile and UAV proliferation, but both tools have
limitations. The United States and other governments have traditionally
used multilateral export control regimes, principally the MTCR, to address
missile proliferation. However, despite successes in strengthening
controls, the growing capability of countries of concern to develop and
trade technologies used for WMD limits the regime's ability to impede
proliferation. For example, between 1997 and 2002, the United States and
other governments successfully revised the MTCR's control lists of
sensitive missile-related equipment and technology to include six of eight
U.S.-proposed items related to cruise missile and UAV technology. Adding
items to the control lists commits regime members to provide greater
scrutiny when deciding whether to license the items for export. Despite
the efforts of these regimes, nonmembers such as China and Israel continue
to acquire, develop, and export cruise missile or UAV technology. The
growing capability of nonmember supplier countries to develop technologies
that could be used for WMD and trade them with other countries of
proliferation concern undermines the regimes' ability to prevent
proliferation.

In October 2002, we reported on other limitations that impede the ability
of the multilateral export control regimes, including the MTCR and
Wassenaar Arrangement, to achieve their nonproliferation goals. We found
that MTCR members may not share complete and timely information, such as
members' denied export licenses, in part because the regime lacks an
electronic data system to send and retrieve such information. The
Wassenaar Arrangement members share export license approval information
but collect and aggregate it to a degree that it cannot be used
constructively. Both MTCR and the Wassenaar Arrangement use a
consensus-based process that makes decision-making difficult. The regimes
also lack a means to enforce compliance with members' political
commitments to regime principles. We recommended that the Secretary of
State establish a strategy to work with other regime members to enhance
the effectiveness of the regimes by implementing a number of steps,
including (1) adopting an automated information-sharing system in MTCR to
facilitate more timely information exchanges, (2) sharing greater and

more detailed information on approved exports of sensitive transfers to
nonmember countries, (3) assessing alternative processes for reaching
decisions, and (4) evaluating means for encouraging greater adherence to
regime commitments.13 However, State has not been responsive in
implementing the recommendation to establish a strategy to enhance the
effectiveness of the regimes. State officials said that the recommendation
is under consideration in a review by the National Security Council that
has been ongoing for over a year.

The U.S. government uses its national export control authorities to
address missile proliferation but finds it difficult to identify and track
commercially available items not covered by control lists. For example,
Bureau of Immigration and Customs Enforcement agents upon inspecting an
item to be exported might identify that the item is a circuit board, but
not that it is part of a guidance system and that the guidance system is
intended for a cruise missile. Moreover, a gap in the catch-all provision
of U.S. export control regulations could allow subnational actors to
acquire American cruise missile or UAV technology for missile
proliferation or terrorist purposes without violating U.S. export control
laws or regulations. This gap in U.S. export control authority enabled
American companies to legally export dual-use items to a New Zealand
resident who bought the items to show how a terrorist could legally build
a cruise missile. The gap results from current regulations that restrict
the sale of certain dual-use items to national missile proliferation
projects and countries of concern, but not to nonstate actors such as
certain terrorist organizations or individuals.14 The United States has
other nonproliferation tools to address cruise missile and UAV
proliferation-diplomacy, sanctions, and interdiction of illicit shipments
of items-but these tools have had unclear results or have been little
used.

13U.S. General Accounting Office, Nonproliferation: Strategy Needed to
Strengthen Multilateral Export Control Regimes, GAO-03-43 (Washington,
D.C.: Oct. 25, 2002).

14See 15 C.F.R. S: 744.3(a). Although the Export Administration
Regulations restrict exports to terrorist organizations and individuals
that are listed in the regulations, the regulations do not apply to those
that are not listed.

  Compliance with Conditions on Exports of Cruise Missiles, UAVs, and Dual-use
  Items Seldom Verified through End-use Monitoring

End-use monitoring refers to the procedures used to verify that foreign
recipients of controlled U.S. exports use such items according to U.S.
terms and conditions of transfer. A post-shipment verification visit is a
key end-use monitoring tool for U.S. agencies to confirm that authorized
recipients of U.S. technology both received transferred items and used
them in accordance with conditions of the transfer.

State is responsible for conducting PSVs on direct commercial sales of
cruise missiles, UAVs, and related technology. We found that State did not
use PSVs to assess compliance with cruise missile or UAV licenses having
conditions limiting how the item may be used. These licenses included
items deemed significant by State regulations.15 Based on State licensing
data, we identified 786 licenses for cruise missiles, UAVs, or related
items16 from fiscal years 1998 through 2002. Of these, 480 (61 percent)
were licenses with conditions, while 306 (39 percent) were licenses
without conditions. We found that State did not conduct PSVs for any of
the 480 licenses with conditions and conducted PSVs on 4 of 306 licenses
approved without conditions. A State licensing official stated that few
post-shipment checks have been conducted for cruise missiles, UAVs, and
related items because many are destined for well-known end users in
friendly countries. However, over fiscal years 1998 through 2002, 129 of
the 786 licenses authorized the transfer of cruise missile and UAV-related
items to countries such as Egypt, Israel, and India. These countries are
not MTCR members, which indicates that they might pose a higher risk of
diversion.

In commenting on a draft of our report, State emphasized the importance of
pre-license checks in verifying controls over the end user and end use of
exported items and said that we did not include such checks in our
analysis. We therefore reviewed the original 786 cruise missile and UAV
licenses to determine how many had received pre-license checks, a possible
mitigating factor reducing the need to conduct a PSV. We found that only 6
of the 786 licenses from fiscal years 1998 through 2002 that State
provided us had been selected for pre-license checks.

15The International Trafficking in Arms Regulations define significant
military equipment as articles for which special export controls are
warranted because of their capacity for substantial military utility or
capability. 22 C.F.R. S: 120.7.

16Related items may include spare parts, software, or technical data.

Defense is responsible for monitoring transfers of cruise missiles, UAVs,
and related technology provided under government-to-government agreements
through the Foreign Military Sales program. Defense's end-use monitoring
program has conducted no end-use checks related to cruise missile or UAV
transfers, according to the program director. From fiscal years 1998
through 2002, DOD approved 37 agreements for the transfer of more than 500
cruise missiles and related items, as well as one transfer of UAV training
software. The agreements authorized the transfer of Tomahawk land-attack
cruise missiles, Standoff land-attack missiles, and Harpoon anti-ship
cruise missiles, as well as supporting equipment such as launch tubes,
training missiles, and spare parts. Approximately 30 percent of cruise
missile transfers were destined for non-MTCR countries. Despite the 1996
legal requirement to create an end-use monitoring program, Defense's
Golden Sentry monitoring program is not yet fully implemented. DOD issued
program guidance in December 2002 that identified the specific
responsibilities for new end-use monitoring activities. In addition, as of
February 2004, DOD was conducting visits to Foreign Military Sales
recipient countries to determine the level of monitoring needed and was
identifying weapons and technologies that may require more stringent
enduse monitoring. The program director stated that he is considering
adding cruise missiles and UAVs to a list of weapon systems that receive
more comprehensive monitoring.

The Commerce Department is responsible for conducting PSVs on exports of
dual-use technology that might have military applications for cruise
missiles and UAVs. Based on Commerce licensing data, we found that
Commerce issued 2,490 dual-use licenses between fiscal years 1998 and 2002
for items that could be useful in developing cruise missiles or UAVs.17
These licenses were for items to countries including India, Israel,
Poland, Switzerland, Turkey, and the United Arab Emirates. Of these,
Commerce selected 2 percent of the licenses, or 52 cases, for a PSV visit
and completed visits for about 1 percent of the licenses, or 29 cases.

Other supplier countries place conditions on cruise missile and UAVrelated
transfers, but few reported conducting end-use monitoring once

17The Commerce Control List does not designate whether an item is useful
for ballistic missiles or cruise missiles, according to Commerce
officials, but identifies only that an item is useful for missile
technology. The 2,490 cruise missile or UAV-related licenses that we
reviewed were in dual-use missile-related categories of items in the
Export Administration Regulations that the Commerce Department determined
contain items that could be used for cruise missile purposes or for UAVs
or their components.

Conclusion

they exported the items. While national export laws authorize end-use
monitoring, none of the foreign government officials reported to us any
PSV visits for cruise missile or UAV-related items. Government officials
in France, Italy, and the United Kingdom stated that their respective
governments generally do not verify conditions on cruise missile and UAV
transfers and conduct few PSV visits of such exports. The South African
government was the only additional supplier country responding to a
written request for information18 that reported it regularly requires and
conducts PSVs on cruise missile and UAV transfers.

The continued proliferation of cruise missiles and UAVs poses a growing
threat to the United States, its forces overseas, and its allies. Most
countries already possess cruise missiles, UAVs, or related technology,
and many are expected to develop or obtain more sophisticated systems in
the future. The dual-use nature of many of the components of cruise
missiles and UAVs also raises the prospect that terrorists could develop
rudimentary systems that could pose additional security threats to the
United States. Because this technology is widely available throughout the
world, the United States works in concert with other countries through
multilateral export control regimes whose limited effectiveness could be
enhanced by adopting recommendations we have made in previous reports.
U.S. export controls may not be sufficient to prevent cruise missile and
UAV proliferation and to ensure compliance with license conditions.
Because some key dual-use components can be acquired without an export
license, it is difficult for the export control system to limit or track
their use. Moreover, current U.S. export controls may not prevent
proliferation by nonstate actors, such as certain terrorists, who operate
in countries that are not currently restricted under missile proliferation
regulations. Furthermore, the U.S. government seldom uses its end-use
monitoring programs to verify compliance with the conditions placed on
items that could be used to develop cruise missiles or UAVs. As a result,
the U.S. government does not have sufficient information to know whether
recipients of these exports are effectively safeguarding equipment and
technology and, thus, protecting U.S. national security and
nonproliferation interests. The challenges to U.S. nonproliferation
efforts in this area, coupled with the absence of end-use monitoring
programs by

18Governments responding to our request were Israel, Japan, South Africa,
and Switzerland. Russia's and Canada's responses were provided too late to
be included in our January 2004 report. Other countries that we queried
provided no information on end-use monitoring.

  Recommendations for Executive Action

several foreign governments for their exports of cruise missiles or UAVs,
raise questions about how nonproliferation tools are keeping pace with the
changing threat.

We recommended that the Secretary of Commerce assess and report to
Congress on the adequacy of the export control regulations' catch-all
provision to address missile proliferation by nonstate actors and on ways
the provision might be modified. We also recommended that the Secretaries
of State, Commerce, and Defense each complete a comprehensive assessment
of the nature and extent of compliance with license conditions on cruise
missiles, UAVs, and related dual-use technology. As part of the
assessment, the departments should also conduct additional PSV visits on a
sample of cruise missile and UAV licenses. This assessment would allow the
departments to gain critical information that would allow them to better
balance potential proliferation risks of various technologies with
available resources for conducting future PSV visits.

Commerce and Defense partially concurred with our recommendations, which
we modified to address their comments. State disagreed with the need to
conduct a comprehensive assessment of the nature and extent of compliance
with license conditions for cruise missile and UAV technology transfers.
However, State said that it would consider conducting more PSVs on such
technology transfers as it improves its monitoring program.

Mr. Chairman and Members of the Subcommittee, this concludes my prepared
statement. I will be happy to answer any questions you may have.

Contact and For future contacts regarding this testimony, please contact
Joseph Christoff at (202) 512-8979. David C. Maurer, Jeffrey D. Phillips,
ClaudeAcknowledgments Adrien, W. William Russell IV, Lynn Cothern, Stephen
M. Lord, and Richard Seldin made key contributions to this statement.

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