Export Controls: Better Interagency Coordination Needed on Satellite
Exports (Letter Report, 09/17/1999, GAO/NSIAD-99-182).

Pursuant to a congressional request, GAO provided information on
interagency coordination on satellite exports.

GAO noted that: (1) the Departments of Commerce and State used licensing
conditions to support U.S. policy outlined in government-to-government
agreements with each country meant to help ensure that technology is
safeguarded; (2) Commerce and State included conditions meant to protect
sensitive technology on 43 licensed commercial communications satellite
launch campaigns by China, Russia, and Ukraine between 1989 and February
1999; (3) licenses for 35 launch campaigns included 5 conditions, while
licenses for 8 launch campaigns issued by Commerce between 1994 and 1997
omitted 3 of these 5 conditions; (4) for these eight launch campaigns,
Commerce did not require: (a) the Department of Defense (DOD) monitors;
(b) preparation of technology control plans; or (c) strict compliance
with the government's safeguards agreements; (5) at the time Commerce
approved these export licenses, it did not consider these three license
conditions necessary; (6) although DOD and State were involved in the
interagency review of these export licenses, neither agency objected to
the omission of these license conditions; (7) since 1997, Commerce and
State have included all five conditions in every licensed launch
campaign; (8) DOD and State documents show that monitoring problems,
unauthorized transfers of technology and other violations of export
control regulations possibly occurred in 14 launch campaigns in China,
Russia, and Ukraine, including some of the campaigns where license
safeguard conditions were omitted; (9) these documents also show that
sensitive technology was transferred in at least three cases and that
two of these transfers raised national security concerns; (10) many of
the problems identified in the 14 launch campaigns arose because of
confusion created by the shared licensing jurisidiction and a lack of
clarity concerning the roles and responsibilities of each agency in
licensing and monitoring these exports; (11) the October 1998
legislation that returned licensing authority for all commercial
communications satellite exports from Commerce to State and led DOD to
establish a monitoring organization should reduce confusion in the
controls over these exports caused by the shared jurisdiction; (12)
however, some confusion may remain because license applications received
before the March 15, 1999, transfer of jJurisdiction will still be
processed by Commerce, and approved licenses will be valid for up to 2
years; and (13) consequently, there will still be a need for the
agencies to coordinate their policies and monitoring activities of
foreign launches.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-99-182
     TITLE:  Export Controls: Better Interagency Coordination Needed on
	     Satellite Exports
      DATE:  09/17/1999
   SUBJECT:  Interagency relations
	     Exporting
	     Licenses
	     Communication satellites
	     Export regulation
	     Technology transfer
	     International trade restriction
	     Foreign trade policies
	     Dual-use technologies
	     Jurisdictional authority
IDENTIFIER:  China
	     Russia
	     Ukraine

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A Report to the Chairman, Subcommittee on International
Security, Proliferation, and Federal Services, Committee on
Governmental Affairs, U. S. Senate

GAO/NSIAD-99-182

September 1999 EXPORT CONTROLS Better Interagency Coordination
Needed on Satellite Exports

National Security and International Affairs Division

B-283228 Letter September 17, 1999 The Honorable Thad Cochran
Chairman, Subcommittee on International Security, Proliferation,
and Federal Services

Committee on Governmental Affairs United States Senate

Dear Mr. Chairman: Since 1992, the Departments of State and
Commerce have largely shared licensing responsibility for the
export of commercial communications satellites. The Department of
Defense (DOD) plays a role in these exports by reviewing export
applications for the licensing agencies and by monitoring
sensitive launch activities. Reports that U. S. satellite
companies had provided China with sensitive technology useful for
improving China's ballistic missiles focused congressional
attention on the issue of satellite

exports and led the House of Representatives to form the Select
Committee on U. S. National Security and Military/ Commercial
Concerns With the People's Republic of China. Troubled by these
reported transfers and concerned that the 1996 shift of most
aspects of licensing responsibility for satellite- related exports
from State to Commerce had weakened controls over these exports
led Congress to pass legislation in 1998 returning

control to State. Although recent congressional actions have
focused attention on launches in China, U. S. satellite
manufacturers also use Russian and Ukrainian launchers. To help
protect sensitive technologies during a satellite launch, the
United States has entered into formal agreements with China,
Russia, Kazakhstan, and Ukraine that give the United States the
right to take steps to safeguard U. S. technology. These
agreements articulate U. S. policy that no technology may be
released that could improve a foreign country's launch vehicles
because this technology could also be used to improve a country's
ballistic missiles. To implement this policy and safeguard
sensitive technology, Commerce and State attach conditions to
export licenses. Concerned that the problems with the exports of
satellites were not limited to China, you asked that we identify
the license conditions applied during the export control process
to protect sensitive technology when using

Chinese, Russian, and Ukrainian launch vehicles and determine
whether unauthorized technology transfers and violations of export
regulations have been identified with these launches. You also
asked for our observations on whether recent legislative changes
would reduce the risks of unauthorized exports of sensitive U. S.
technology. To address these issues, we obtained and reviewed
State, Commerce, and DOD export licensing records for satellite
exports for launch on Chinese, Russian, and Ukrainian launch
vehicles. We interviewed officials from these agencies and also
reviewed information provided by U. S. satellite companies. (See
app. IV for a detailed description of our scope and

methodology.) Results in Brief The Departments of Commerce and of
State used licensing conditions to support U. S. policy outlined
in government- to- government agreements with each country meant
to help ensure that technology is safeguarded. The

Departments of Commerce and of State included conditions meant to
protect sensitive technology on 43 licensed commercial
communications satellite launch campaigns by China, Russia, and
Ukraine between 1989 and February 1999. Licenses for 35 launch
campaigns included 5 conditions, while licenses for 8 launch
campaigns issued by Commerce between 1994 and 1997 omitted 3 of
these 5 conditions. 1 For these eight launch campaigns, Commerce
did not require (1) DOD monitors, (2) preparation of technology
control plans, or (3) strict compliance with the government's
safeguards agreements. 2 At the time Commerce approved these
export licenses, it did not consider these three license
conditions necessary. Although DOD and State were involved in the
interagency review of these export licenses, neither agency
objected to the omission of these license conditions. 3 Since
1997, Commerce and State have included all five conditions in
every licensed launch campaign. 1 The two conditions included on
all launch campaigns were (1) outlining the limits of authorized
technical data and (2) requiring exporters to restrict foreign
personnel's physical access to U. S. technology. 2 Though not
required, DOD monitors did attend the launches, but not all
technical meetings, for three of the eight launch campaigns. A
fourth campaign from this eight was cancelled before launch. 3
While State's Office of Defense Trade Controls issues export
licenses for satellites and other Munitions List items, another
part of State reviews and provides comments on Commerce export
licenses.

DOD and State documents show that monitoring problems,
unauthorized transfers of technology and other violations of
export control regulations possibly occurred in 14 launch
campaigns in China, Russia, and Ukraine, including some of the
campaigns where license safeguard conditions were omitted. These
documents also show that sensitive technology was transferred in
at least three cases and that two of these transfers raised
national security concerns. Specifically, as a result of launch
failure investigations conducted with the help of U. S. companies,
China obtained information that could improve its launch vehicles
and ballistic missiles. Many of the problems identified in the 14
launch campaigns arose because of confusion created by the shared
licensing jurisdiction and a lack of clarity concerning the roles
and responsibilities of each agency in licensing and monitoring
these exports. Some problems occurred because the exporting
companies did not have effective controls and procedures to ensure
compliance with U. S. export regulations. The October 1998
legislation that returned licensing authority for all commercial
communications satellite exports from Commerce to State and led
DOD to establish a monitoring organization should reduce confusion
in the controls over these exports caused by the shared
jurisdiction. 4 However, some confusion may remain because license
applications received before the March 15, 1999, transfer of
jurisdiction will still be processed by Commerce, and approved
licenses will be valid for up to

2 years. Consequently, there will still be a need for the agencies
to coordinate their policies and monitoring activities of foreign
launches. Although this need exists, State, DOD, and Commerce have
not agreed on or established clear procedures for each agency to
follow in implementing the safeguards outlined in the government-
to- government technology safeguards agreements. In implementing
the legislative changes, DOD may have difficulty hiring and
retaining qualified monitors experienced with the sensitive
technologies at risk. Additionally, license processing times for
satellite exports may also increase. State has not authorized the
hiring of all

the staff requested by its Office of Defense Trade Controls nor
increased the pay structure of its licensing officers as
recommended in a report by State's Office of Inspector General. In
this report, we are making a recommendation to improve State,
Commerce, and DOD implementation of U. S. policy on protecting
sensitive 4 Changes regarding satellite exports were made by the
National Defense Authorization Act for Fiscal Year 1999 (P. L.
105- 261, 112 Stat. 2173).

satellite- related technology and to ensure compliance by U. S.
exporters with U. S. satellite export regulations. Background U.
S. export controls over commercial communications satellites are
complicated, involve numerous agencies, and have changed
frequently since 1988 when the United States first agreed to
permit the use of Chinese launch vehicles. The U. S. export
control system for dual- use items and items with military
applications is divided into two regimes. Commerce

licenses most dual- use items, which have both commercial and
military applications, while State licenses munitions items, which
are designed, developed, configured, adapted, or modified solely
for military

applications. By design, Commerce gives greater weight to economic
and commercial concerns, implicitly accepting greater security
risks, whereas State gives primacy to national security and
foreign policy concerns, lessening but not eliminating the risk of
damage to U. S. national security interests. 5 State's and
Commerce's regulations define what items are controlled and what
items require export licenses. These licenses define the item or
technical assistance or data that is authorized for export and may
include conditions that the exporter must follow in carrying out
the export.

Prior to 1992, State was the sole export licensing authority for
commercial communications satellites, but in 1992, State and
Commerce began to share export- licensing jurisdiction. As a
result of an interagency review completed in 1992 to identify
dual- use items on the State Munitions List that could be
transferred to Commerce while still protecting national

security interests, Commerce was given authority to license commercial communications satellites that did not include certain militarily sensitive capabilities. Supporters of this move argued that such satellites were civilian in nature and that the United States was the only country to treat commercial communications satellites as a military export. State retained control over more advanced satellites as well as more advanced launch- related technical data. 6 As a result of the regulatory changes, 5 The following two GAO products discuss issues relating to the transfer of license authority to Commerce: Export Controls: Issues Related to the Export of Communications Satellites (

GAO/T-NSIAD-98-208
, June 10, 1998) and Export Controls: Change in Export Licensing Jurisdiction for
security interests, Commerce was given authority to license
commercial communications satellites that did not include certain
militarily sensitive capabilities. Supporters of this move argued
that such satellites were civilian in nature and that the United
States was the only country to treat commercial communications
satellites as a military export. State retained control over more
advanced satellites as well as more advanced launch- related
technical data. 6 As a result of the regulatory changes, 5 The
following two GAO products discuss issues relating to the transfer
of license authority to Commerce: Export Controls: Issues Related
to the Export of Communications Satellites (  GAO/T-NSIAD-98-208 ,
June 10, 1998) and Export Controls: Change in Export Licensing
Jurisdiction for

Two Sensitive Dual- Use Items (GAO/NSIAD-97-24, Jan. 14, 1997). 6
Commerce maintained jurisdiction over basic technical data needed
to attach the satellite to the launch vehicle, commonly described
as form, fit, and function data.

Commerce and State shared satellite jurisdiction and, depending on
the satellite's capabilities, either agency could issue an export
license for the export of the satellite. If the export was
licensed by Commerce but also involved the transfer of technical
data beyond what was within Commerce's jurisdiction to control,
then the exporter would also need to obtain a technical assistance
license from State. In 1996, the executive branch modified this
shared arrangement and transferred licensing control for all
commercial communications satellites, including those with
sensitive military capabilities, to Commerce. As part of this
change, Commerce placed additional regulatory controls on these

satellites so as to provide the same level of control as found
under State regulations. 7 After the 1996 change, State did not
issue export licenses for satellites but was still responsible for
issuing assistance licenses for technical data for those launch
campaigns when the foreign launch required technical data beyond
Commerce's jurisdiction to control. Based partly on concerns that
the 1996 transfer of jurisdiction to Commerce had weakened
controls over satellite exports, Congress returned satellite-
licensing authority to State, effective March 15, 1999, in a
provision in the National Defense Authorization Act for fiscal
year 1999. U. S. satellite manufacturers often use Chinese,
Russian, and Ukrainian rockets to launch commercial communications
satellites. Both Russia and Ukraine employ launch facilities in
Kazakhstan, a former Soviet republic, and a new U. S. Ukrainian,
Russian, and Norwegian joint venture will use a

sea- based platform for its launch operations. In 1988, the United
States first agreed to permit the launch of U. S.- built
commercial communications satellites on a non- allied country's
launch vehicle with an agreement permitting China to launch U. S.-
made satellites. 8 At that time, just 2 years after the space
shuttle Challenger disaster, the U. S. launch industry was
struggling to meet the launch needs of the satellite industry. The
first launch in China of a U. S.- built satellite occurred in
1990. In 1993 and 1996, the United States reached agreement with
Russia and Ukraine to permit the

use of their launch vehicles to place U. S.- made communication
satellites into orbit. 7 Changes included the establishment of the
significant item control category for satellites to control their
export to all destinations and new approval procedures that
required that licensing decisions for these satellites be made by
majority vote of the reviewing agencies. 8 The United States first
used Japanese launch vehicles in 1977 and French/ European launch
vehicles in 1983.

The reason export licenses are necessary and U. S. policy is not
to transfer technology that could improve a foreign country's
launch vehicles is that the technology used in launch vehicles to
place a satellite into orbit can also be used in developing
ballistic missiles. As shown in figure 1, the

similarities in technology include (1) reentry vehicle technology;
(2) payload separation technology; (3) inertial guidance and
control systems; (4) staging mechanisms; (5) propellants; (6)
airframes, motor casings, and insulation; (7) engines; (8) thrust
vector control systems; and (9) exhaust nozzles. The sensitivity
of the U. S. technology at risk is different for each foreign
launch depending on the capabilities of the country providing the
launch service.

Figure 1: Applicability of Space Launch Vehicle Technology to
Ballistic Missiles

Warhead Appllies only to ballistic missiles

Reentry Vehicle Similar to SLV return capsule technology

Payload Separation Procedures similar for single RV or a satellite

Inertial Guidance & Control Systems Similar hardware with tailored
software

Staging Mechanisms

Same

Propellants

Same manufacturing techniques

Strap- on Boosters Technology may be employed to create missile
stages

Air Frame, Motor Cases, Liners &

Insulation Same

Engine or Motors

Same for first stage

Thrust Vector Control Systems Same

Exhaust Nozzels Similar and Usually identical

Space Launch Ballistic Missile Vehicle Design

Design (Solid Propellant (Liquid Propellant System Shown) System
Shown)

Technology and equipment generally unique to ballistic missiles

SLV Technology and equipment might be adequate - must be examined
on case- by- case basis Technology and equipment generally
adequate for either SLV or ICBM

Source: Central Intelligence Agency.

U. S. policy has consistently specified that an exported
commercial communications satellite for launch by China, Russia,
or Ukraine may not include technology that could improve the
design, development, or production of the foreign country's launch
vehicle. To ensure that sensitive

technology is protected while using Chinese, Russian, and
Ukrainian launch vehicles, the United States negotiated detailed,
government- to- government technology safeguards agreements with
each country. The agreements apply to all phases of the launch and
establish the rights of the United States to safeguard satellite
exports in the foreign country. The agreements limit the technical
data that can be provided and prohibit the transfer of technical
data not authorized for release. The agreements also require that
physical access to the satellite and related equipment be
restricted 24 hours a day. The agreements require the United
States to oversee and monitor implementation of technology
transfer control plans and establish the right of the United
States to monitor meetings and launch operations. 9 Many of the
safeguard mechanisms discussed in the technology safeguards
agreements, including having monitors and using technology
transfer

control plans, are implemented through the attachment of
conditions on export licenses for the satellite. These licensing
conditions are typically imposed after an interagency review of
the export application and a discussion of the technologies
involved and the safeguards that are appropriate. DOD plays a
supporting role in exports of commercial communications satellites
by reviewing and making recommendations on both Commerce and State
export license applications and providing

monitors at technical meetings and at launches to ensure
compliance with export licenses. Prior to the 1999 transfer of
jurisdiction, State also reviewed Commerce satellite export
applications and made recommendations concerning whether the
applications should be approved and what conditions should be
attached to the licenses to safeguard the exports. 9 A technology
transfer control plan is a plan developed by the U. S. exporter
and approved by the U. S. government that outlines security
measures to be followed during the launch campaign. The agreements
also note that, in cases where there is a disagreement, the
provisions of the technology safeguards agreements take precedence
over the technology control plans.

Safeguard License Thirty- five of the 43 launch campaigns licensed
to use Chinese, Russian, Conditions Applied, and Ukrainian launch
vehicles since 1989 included five license conditions to protect
sensitive U. S. technology. However, Commerce approved eight With
Some Exceptions launch campaigns before 1997 that omitted license
conditions requiring

(1) DOD monitors, (2) preparation of a technology control plan, or
(3) explicit compliance with the government- to- government
technology safeguards agreements. Commerce's policy before 1997
was to not explicitly require these license conditions and, during
the interagency review of these eight export licenses, neither
State nor DOD requested that Commerce include these conditions.
Since 1997, Commerce has applied these license conditions to all
launch campaigns.

Safeguards Used on Between 1989 and February 1999, the Departments
of Commerce and State Licensed Launches in China, issued licenses
for 43 overseas launches of U. S.- manufactured commercial

communications satellites in China, Russia, and Ukraine. 10
Commerce Russia, and Ukraine

licensed the satellite export for about three- quarters of the
launch campaigns, and State licensed the remaining one- quarter
(see table 1). Because State regulations require a separate
license application for the actual satellite, technical data
needed to conduct the launch, and other activities, multiple
licenses were often issued for a single launch campaign. We
identified over 100 licenses associated with these launches. Table
1: Launch Campaigns by Licensing Agency, 1989  February 1999

Country of launch service provider Lead licensing agency China
Russia Ukraine Total

Commerce 13 19 0 32

State 7 3 1 11 Total 20 22 1 43

Note: State or Commerce is cited as the licensing agency if it
issued an export license for the satellite. Source: Our analysis
based on Commerce and State licensing records.

10 In the 43 launch campaigns, 82 satellites were launched. The
number of satellites launched exceeded the number of launches
because rockets often launched more than one satellite. In our
study, we included several licenses that, although issued, were
eventually not used.

We reviewed each of the export licenses issued by State and
Commerce for these 43 launch campaigns and identified five general
categories of licensing conditions the agencies used to protect
against the transfer of sensitive technology and implement the
government- to- government technology safeguards agreements. These
agreements discuss U. S. rights in each of these general
categories and describe in detail issues such as the

limitations on the exchange of technical data and the physical
security procedures that must be followed. State, DOD, and
Commerce officials noted that these safeguards are now routinely
implemented through conditions on export licenses. The five
categories of conditions used by State and Commerce to protect
sensitive technology and implement the technology safeguards
agreements include  outlining the limits of authorized sensitive
technical data exchange

between the satellite exporter and the foreign launch service
provider;  restricting physical access of foreign personnel to U.
S. technology;  requiring exporter compliance with the negotiated
government- to- government technology safeguards agreements;

 requiring the exporter to develop a DOD- approved technology
transfer control plan outlining the exporter's internal control
procedures for preventing disclosure of technology; and  requiring
DOD monitors at technical meetings related to launches and at the
launches as well as reimbursement to the U. S. government for the

monitors. Licensing Safeguards Were Commerce and State required
all five safeguard conditions to protect Generally Applied

sensitive U. S. technology on 35 of the 43 satellite launch
campaigns. As table 2 shows, export licenses in all of the launch
campaigns since 1989 contained language clearly limiting the scope
of the technical data that the satellite manufacturers could
supply to the foreign launch service providers. Table 2 also shows
that export licenses for all of the launch campaigns contained
explicit descriptions of measures intended to limit physical
access to the satellite and any technical data not covered by the

license. Export licenses for a large majority of the launch
campaigns also included requirements for DOD monitors at technical
meetings and the launch, the preparation of a DOD- approved
technology transfer control plan, and strict compliance with the
technology safeguards agreements between the United States and
China, Russia, or Ukraine.

Table 2: Frequency of License Safeguards Required by the Lead
Licensing Agency, 1989  February 1999 Launch campaign

Total all lead licensing agency campaigns Commerce

State License safeguard (percent) (percent) Percent Number

Limit technical data transfer 100 100 100 43 Restrict physical
access to satellite 100 100 100 43 Require U. S. company
compliance with government technology safeguards agreement 75 100
81 35

Require U. S. company to prepare a technology control plan 75 100
81 35

Require DOD monitors at meetings and the launch and reimbursement
for DOD monitoring expenses 75 100 81 35

Source: Our analysis based on Commerce and State licensing
records.

Commerce Did Not Require Commerce licensed eight launch campaigns
without license conditions that Some Safeguards on All

require (1) technology control plans, (2) DOD monitors, and Launch
Campaigns (3) compliance with the technology safeguards agreement
between the United States and the relevant government (see table
3). At the time Commerce approved these export licenses, it did
not consider these three license conditions necessary. Though they
were not required in the licenses, DOD monitors did observe the
launch, but not all of the technical meetings, for three of these
campaigns, and another campaign was canceled prior to launch.
Neither State nor DOD insisted as part of the

interagency review of these licenses that these conditions be
included on the licenses. In all of these eight campaigns, the
exporters believed they could perform the foreign launch solely
under the authority granted by the Commerce license, and none
obtained a State license to perform technical assistance related
to conducting the launch campaign. 11 All eight of these campaigns
were licensed by Commerce before 1997. In 1997, under pressure
from DOD and State, Commerce began to regularly include these
safeguards. 11 The shared jurisdiction over technical data needed
to integrate a satellite to a launch vehicle led to some confusion
over the boundaries of what was controlled by Commerce as form,
fit, and function data and whether a separate State license for
technical assistance was needed.

Table 3: Launch Campaigns Licensed Without Three Safeguards, 1989
February 1999 License conditions

Technology Licensed

Agency that Countryof License Comply with Monitors and control
launch

licensed launch

final action security reimbursement plan campaign

satellite provider

date agreement

required required Comments

Apstar 2 Commerce China Feb. 1994 No No No Launch and meetings not
monitored. Faisat 1 Commerce Russia Mar. 1994 No No No Air Force
personnel did

attend launch activities. DOD monitoring officials said, however,
that the Air Force personnel were not from and did not report to
DOD's monitoring program.

Optus B3 Commerce China May 1994 No No No Though not required by
the export license, DOD monitored the launch and many, if not all,
technical meetings using DOD funds.

Echostar 1 Commerce China Aug. 1994 No No No Though not included
as a license requirement, the exporter did prepare a technology
control plan for the launch campaign and paid for DOD monitors at
the launch. According to the exporter, DOD also monitored some
technical meetings.

Echostar 2 Commerce China Aug. 1994 No No No Launch canceled.
Apstar 1A Commerce China June 1995 No No No Launch and meetings
not monitored.

Chinasat 7 Commerce China Feb. 1996 No No No Launch and meetings
not monitored. Chinastar Commerce China Feb. 1996 No No No Though
not included as a license requirement, DOD

monitored the launch (but not earlier technical meetings) because
the exporter offered to pay the monitors' expenses.

Source: GAO analysis based on Commerce and State licensing
records.

Commerce also omitted these safeguard conditions for five
additional launch campaigns before 1997, but exporters in these
five campaigns also obtained a State license, which did include
the safeguard conditions (see

table 4). Commerce officials said that these license conditions
were not omitted because of the corresponding State license
requirements. In fact, they said they are often unaware of related
State licenses when processing an application. While not all
launch campaigns require a State technical assistance license, in
each of these cases, the exporter did obtain a State license to
conduct the launch campaign. State, acting independently from
Commerce, granted licenses that included the safeguards as license
conditions and required them to be in place for these launch
campaigns. 12 Table 4: Launch Campaigns That Included Safeguards
Only in State Department Licenses

License conditions Country of Comply with Monitors and

Technology Licensed launch

launch security reimbursement control plan

campaign provider Date Licensing agency

agreement required

required

Astra 1F Russia Sept. 1994 Commerce No No No Sept. 1993 State Yes
Yes Yes Apstar 2R China Dec. 1995 Commerce No No No

Jan. 1996 State Yes Yes Yes Mabuhay China Feb. 1996 Commerce No No
No

Feb. 1996 State Yes Yes Yes Asiasat 3 Russia Sept. 1996 Commerce
No No No

Sept. 1993 State Yes Yes Yes Astra 1G Russia Oct. 1996 Commerce No
No No

Sept. 1993 State Yes Yes Yes Source: GAO analysis based on
Commerce and State licensing records.

Reasons for Not Requiring Shortly after Commerce assumed licensing
responsibility for some

the License Safeguards commercial communications satellites in
1992, it implemented policies on license requirements that did not
require DOD monitors at technical meetings or development of
technology control plans. 13 Commerce officials said that up until
sometime in 1996, the Department held to this policy 12 As in the
cases cited in table 3, State and DOD did not require that these
three safeguards be made part

of these licenses during the interagency review of these licenses.
13 In the first launch campaign licensed by Commerce in 1994,
Asiasat 2, the agency imposed the same safeguards as State
required in its licenses. After this campaign, however, it
implemented its own policies.

because it believed that exporters should not be required to
reimburse the U. S. government for the cost of monitoring launch
campaigns. These officials said that such charges were considered
to be the same as export fees, and Commerce, under the Export
Administration Act, is prohibited from charging a fee in
connection with submitting or processing an export application.
Commerce did include as part of its licensing conditions the U. S.
government's right to monitor the launch and the technical
meetings but did not require the government to monitor the launch
or require exporters to reimburse the government for the costs of
monitoring. DOD

did not have staff and funding resources dedicated to monitoring
and, consequently, DOD did not monitor launch campaigns where
reimbursement was not a requirement. 14 Commerce also did not
always include license conditions requiring

technology transfer control plans. Commerce believed that the
basic technical data needed to integrate a satellite with a launch
vehicle did not require an export license. 15 Because Commerce did
not require a license for the export of the basic technical data,
it believed that an exporter did not need to develop a technology
control plan to protect data that did not require a license. 16
Commerce's approach in these cases did not address the need to
ensure that exporters did not transfer technical data beyond what
was allowed for export under Commerce's jurisdiction. While
Commerce

did not explicitly require compliance with the technology
safeguards agreements, it did include license conditions that
described the limits of technical data exchange and the required
physical security procedures. DOD and State officials stated that
during the interagency review of Commerce export licenses, they
did not consistently recommend that Commerce include all the
license conditions that State had used because they assumed that
these requirements would be added to State- issued licenses
authorizing the export of technical data for these launch
campaigns. Nevertheless, the satellite exporters in the eight
cases where

conditions were omitted did not obtain separate State technical
assistance 14 Problems with DOD's support and funding of the
monitoring program are discussed in the Senate Select Committee on
Intelligence's report, Report on Impacts to U. S. National
Security of Advanced Satellite Technology Export to the People's
Republic of China (Washington, D. C.: Government Printing Office,
May 1999).

15 Commerce advised exporters that the basic technical data used
to integrate a satellite to a launch vehicle-- form, fit, and
function data could be exported without an export license. 16
State routinely required exporters to obtain a license for the
export of technical data needed to carry out the launch campaign.

licenses. The export licenses issued by Commerce enabled the
exporter to conduct those launch campaigns without obtaining a
State license. In about 1995, DOD recognized that safeguards had
not been included on some Commerce licenses and in 1997 reached an
agreement with Commerce on a standard set of conditions that
included requirements for DOD monitors, technology control plans,
and adherence to the technology safeguards agreements.

Impact of Omitted Though it was not required, DOD did monitor the
launch activities for three Safeguards Unclear of the eight launch
campaigns licensed by Commerce that did not contain all of the
safeguards. As noted in table 3, the exporter voluntarily paid for

DOD's expenses to monitor two launches, and DOD paid the cost on a
third. 17 However, pre- launch technical meetings were not
monitored in every case, and these technical meetings can involve
discussions of sensitive technology. 18 DOD officials stated that
they did not know whether

unauthorized transfers of controlled technology occurred at these
and other unmonitored meetings and launches because they were not
present. A report on satellite exports to China by the Senate
Select Committee on Intelligence noted that unmonitored launch
campaigns and meetings provided China with opportunities to
collect technical information and that China likely took advantage
of these opportunities. It also noted that it is extremely
unlikely that the U. S. government would be aware of any
technology transfer unless it was fortunate enough to detect
evidence through other channels.

Possible Unauthorized Monitoring problems and unauthorized
transfers of technology and Technology Transfers violations of
export control regulations may have occurred on 14 campaigns to
launch U. S. commercial communication satellites using and Export
Violations Chinese, Russian, and Ukrainian launch vehicles. Two of
the cases raised Reported U. S. national security concerns. These
problems were partly caused by confusion created by the lack of
clarity about the roles and responsibilities of each agency in
licensing and monitoring these exports and partly by 17 As noted
in table 3, the Echostar 2 satellite licensed for launch in China
was subsequently canceled.

18 According to Lockheed- Martin, some technical interface
meetings on Echostar 1 were apparently monitored because the
company agreed to schedule these meetings in conjunction with
Asiasat 2 meetings that were required to be monitored. According
to the exporter, DOD did monitor all technical meetings on the
Optus B3 campaign. DOD monitors, however, stated that they do not
believe that all technical meetings were monitored.

companies' apparent failure to establish effective controls and
procedures to ensure compliance with U. S. export regulations.
Possible Violations of Monitoring problems, possible violations of
export control regulations, and Export Control Regulations
unauthorized transfers of technology have been found or are under
Raise National Security investigation by State, Customs, and the
Department of Justice on 14 Concerns

launch campaigns involving China, Russia, and Ukraine. These
problems range from concern about unmonitored meetings to the
transfer of technology that DOD and State determined raise U. S.
national security concerns and highlight the importance of both
requiring licensing safeguards and a coordinated approach to their
effective implementation. Appendix I summarizes the launch
campaigns where compliance issues have been identified or are
under investigation. In two launch campaigns, DOD and State
concluded that the unauthorized release of technical information
by U. S. satellite companies raised national security concerns.
During the Apstar 2 and Intelsat 708 failure investigations in
1995 and 1996, Hughes Space and Communications Company and Space
Systems Loral allegedly provided information to China that could
be used to improve the design and increase the reliability of its
launch vehicles and ballistic missiles. In a third launch
campaign, Asiasat 2, Martin Marietta Aerospace provided assistance
to China on its newly developed satellite kick motor. This
transfer, according to State officials, did not significantly harm
national security but could allow China to focus its research
efforts and apply U. S. technology to its ballistic missile
programs. State is continuing its investigation of this case.
State, Customs, and Justice are now reviewing or investigating
other launch campaigns, and it is unclear whether unauthorized
technology was transferred. Among the incidents involving launch
campaigns using Chinese, Russian, and Ukrainian launch vehicles
are the following:

 A U. S. company reportedly assisted China by providing consulting
services, including analyzing satellite test results, without a
valid export license and without DOD oversight. State is currently
investigating this case and has also referred the matter to
Customs for investigation.  The U. S. company COMSAT may have
provided technical assistance

controlled on State's Munitions List to an Asian satellite
operator without authorization. State has referred this matter to
Customs for criminal investigation.

 Boeing's Sea Launch company, a joint venture business using
Ukrainian launch vehicles, was charged by State with 207
violations of export control regulations for exporting technical
data without authorization. In September 1998, State and Boeing
signed a consent agreement that included $10 million in penalties.
Lockheed Martin obtained an export license to perform a failure
review after the failure of a Russian launch vehicle to properly
place a satellite

into orbit. A European satellite company, however, participated in
the review and analysis without authorization from State. State is
continuing to investigate this case.

Poor Agency Effective implementation of the policy limiting
technology transfer on Implementation Causes

foreign launches outlined in the government- to- government
technology Problems safeguards agreements requires a coordinated
and consistent approach by the export licensing agencies and DOD
in monitoring the implementation of the policy. As we noted
previously, the agencies involved in licensing and monitoring
launch campaigns have, at times, implemented different policies
related to satellite exports and have not effectively coordinated
their work. 19 As a result, U. S. government controls over
sensitive technical data differed, support for effectively
implementing the

government- to- government technology safeguards agreements was
inconsistent, and Commerce and DOD may have acted outside their
authorities.  Commerce and State shared export- licensing
jurisdiction for the technical data needed to launch a satellite
but did not establish clear jurisdictional boundaries over this
data. Commerce's policy for controlling technical data differed
from DOD and State policies. Commerce did not require a license
for technical data transfers in cases where State would have
required a license. The different approaches on controlling
technical data made the U. S. government policy on controlling
this data unclear and made it difficult for DOD monitors to know
what technical data could be released.

 Commerce, State, and DOD policies and decisions were not
consistent in supporting license conditions needed to implement
the technology safeguards agreements.

19 State's and Commerce's split jurisdiction over stealth- related
exports has also created concerns. See Export Controls: Concerns
Over Stealth Related Exports (GAO/NSIAD-95-140, May 10, 1995).

 Until 1997, Commerce did not consistently support the requirement
for DOD monitors at launches and technical meetings. Commerce did
include license conditions granting DOD the right to monitor
technical meetings and overseas launches but did not require
companies to reimburse DOD for the cost of monitoring. Commerce
also did not consistently require exporters to prepare and use
technology transfer control plans. The U. S. authority to oversee
and monitor implementation of the plans and to monitor launch
operations is granted in the government- to- government technology

safeguards agreements.  State was inconsistent in supporting the
provisions of the technology safeguards agreements. While State's
Office of Defense Trade

Controls consistently required that license conditions include
provisions for DOD monitors and technology control plans on all
satellite licenses, the State office that reviewed Commerce export
licenses did not require Commerce to include similar conditions on
all its licenses. This approach to Commerce's licenses also
conflicted with the safeguards outlined in the State- negotiated,
government- to- government technology safeguards agreements.  DOD
reviewed Commerce export license applications but did not
consistently recommend that license conditions be added that would
require DOD monitors or technology control plans for all satellite
export licenses.

 DOD's launch monitoring activities were not effectively
coordinated with the export licensing agencies.  DOD monitors did
not routinely report on their work to State and Commerce or keep
records of their monitoring activities. Commerce and State
officials said they were unaware of many of the problems that DOD
monitors identified because they were not routinely informed of
the results. The Senate Select Committee on Intelligence reported
that incomplete record- keeping prevented the Committee from
understanding which technical meetings were or were not monitored.
Neither Commerce nor State reviewed DOD's monitoring activities.
State officials said they had not actively monitored or overseen
DOD's work because DOD was responsible for monitoring overseas
launch campaigns, and Commerce officials said that Commerce does
not perform on- site monitoring for any of its exports.
Consequently, it was not until after the investigation of the 1996
Intelsat failure review that State and Commerce learned of the
problems in DOD's monitoring program and the numerous problems in
other launch

campaigns, including foreign insurance companies being provided
sensitive technical data during overseas launches.  DOD monitors
may have provided exporters with advice on whether

certain activities required an export license without informing
Commerce and State. While monitors are expected to ensure that
technical discussions and other activities are consistent with the
terms of an existing license, only State and Commerce had the
legal authority

to make decisions on whether activities not previously authorized
require a license or can be performed without a license. DOD
monitors may have provided licensing advice to companies that
contributed to the problems being reviewed in three launch
campaigns (Optus B2, Asiasat 2, and Asiasat 3).  Commerce did not
inform State or DOD of a key export approval decision relevant to
these agencies and to national security. In 1995, Commerce told
Hughes Space and Communications Company that it could release its
Apstar 2 launch- failure report to China without an export
license. Commerce took this action without informing DOD or State,
even though this data involved the Chinese launch vehicle and was
clearly under State's jurisdiction. Despite these past and ongoing
problems, State, Commerce, and DOD officials said they have not
developed an interagency agreement on how to address these issues
to ensure that U. S. policy on safeguarding sensitive

technologies used in foreign launches is consistently implemented.
20 State officials agreed that guidelines defining the roles and
missions of each agency in implementing this policy would help
prevent problems in the

future. Commerce and DOD officials noted that while they have
coordinated on developing a standard set of license conditions and
other issues (for example, the agencies routinely meet to discuss
export applications), this coordination was limited and has not
effectively

prevented the problems we noted. 21 20 Commerce will remain
involved in future launch campaigns because, while licensing
jurisdiction officially shifted to State in March 1999, satellite
export applications that Commerce received before the change and
subsequently approved remain valid for up to 2 years. 21 A
Commerce official said that coordination with State has been
hampered at times because many different parts of State are
involved in the process. State's Bureau of Political Military
Affairs oversees the Office of Defense Trade Controls and export
licensing for munitions- related items while the Bureau of
Nonproliferation coordinates with Commerce on dual- use export
licenses.

Company Actions and Lax Some of the problems being investigated by
State and Customs are

Controls attributable to company actions and lax company controls
and procedures to prevent unauthorized exports. In 1992 and 1995,
Hughes participated in accident investigations of the Optus B2 and
Apstar 2 launch failures in China and provided China with
technical assistance on how to correct the identified problems. In
1996, Loral and Hughes participated in an accident review of the
failed launch of an Intelsat satellite on a Chinese launch vehicle
and provided technical advice on the cause of the launch vehicle
failure. In none of these three cases did the companies request or
obtain the required State export license authorizing such work. In
other cases being investigated, the companies' organization and
procedures may have been ineffective in ensuring that the
companies followed export regulations. State attempted to address
these lax controls in its Boeing Sea Launch settlement by
requiring the company to make organizational changes in its
internal oversight of exports and allowing Boeing to pay $2.5
million of the $10 million in penalties on internal control
improvements at the company. In another case, Lockheed Martin
agreed to restructure its internal export compliance procedures as
part of a voluntary

disclosure to State of problems in one of its launch campaigns.
Recent Legislative Legislative changes to satellite export
controls were passed in 1998 to Changes Address Some ensure that
the licensing process more consistently addresses national
security considerations. While these changes address some causes
of past Export Licensing export licensing problems, they do not
fully resolve the implementation Problems problems by State,
Commerce, and DOD of licensing and oversight policies to safeguard
satellite exports. Also, State, DOD, and industry officials have
identified potential difficulties regarding the establishment of a
monitoring division at DOD. License processing times for satellite
exports may also increase.

Satellite Export Controls On October 17, 1998, Congress passed
legislation that changed export Changed Due to the controls over
commercial communications satellites. The legislation's key

Transfer of Controlled provisions, as implemented by State and
Commerce in regulations, include: Technology

 transferring commercial communications satellite export licensing
authority from Commerce to State beginning March 15, 1999;
consolidating control of technical data at State;  requiring a
DOD- approved technology transfer control plan for all

satellite export licenses;

 creating the Space Launch Monitoring Division at DOD with 42
staff dedicated to supporting the monitoring of foreign launches
of U. S. satellites;  requiring DOD monitoring of a broader range
of activities, including

technical discussions and satellite processing and launch
activities and requiring the license holder to reimburse DOD's
entire monitoring costs; and  requiring licenses for
investigations of crashes of U. S. satellites launched in foreign
countries. Congress made these changes partly in response to
concerns about the 1996 transfer of licensing authority for
exports of commercial communications satellites from State to
Commerce. Congress was concerned that the transfer had resulted in
weakened U. S. government procedures and controls on the flow of
militarily sensitive technology to countries of proliferation and
national security concerns, such as China.

Legislative Changes Address The recent legislative changes will
address some of the apparent causes of Some Licensing Problems

the export licensing problems on overseas launches of commercial
communications satellites. For example, transferring satellite-
licensing authority to State from Commerce for license
applications received after March 15, 1999, will address any
confusion created by shared jurisdiction over these exports and
help ensure that satellite- related exports are

reviewed and treated as sensitive Munitions List items.
Consolidating export control responsibility at State should remove
ambiguity over the control of technical data, since State has
consistently required a license for technical data and assistance
related to each satellite export. State has also consistently
applied safeguards, including requiring DOD monitors at the

launch, to export licenses. Furthermore, according to a senior
State official, under the new regulations implementing the
legislative changes, all Commerce satellite license applications
received before the change in jurisdiction on March 15, 1999, will
be subject to State's stricter controls on technical data. 22 The
impact of legislating the monitoring of crash investigations is
less clear, since this is not a new requirement. State and DOD
officials noted 22 A State official also said State is reviewing
and will revoke past jurisdiction determinations State has

made that gave Commerce licensing jurisdiction over some space-
related commodities to reflect the recent legislative changes.

that investigations of satellite launch crashes are considered
defense services under State regulations and have always required
a State Department license. Legislative Changes Will Not

The recent legislative changes do not fully address the
implementation Fully Address Other problems in approving and
monitoring commercial communications Problems satellite exports.
While the changes have consolidated export authority at State,
additional interagency coordination is still necessary for the
implementation of the safeguards on previously licensed Commerce
exports and State licensed exports. In implementing the
legislative changes, the agencies have not reached an agreement on
what role each agency will play in monitoring overseas launches,
which agency will provide licensing guidance to exporters, or how
the agencies will coordinate their oversight of any future launch
failures. Further, State and DOD have not established a formal
mechanism for distributing monitors' reports to licensing
officials or clearly identified and defined the roles of U. S.
embassy staff in China, Russia, Ukraine, and Kazakhstan that will

support the exercise of U. S. rights under the technology
safeguards agreements. Additionally, coordination within State
concerning the treatment of export licenses issued by State for
Munitions List items with the comments State provides on Commerce
licenses has not been addressed and may remain a problem. Dual-
use export licenses are

reviewed by State's Bureau of Nonproliferation while Munitions
List licenses are managed by State's Bureau of Political Military
Affairs.

Establishment of New DOD The establishment of an organization at
DOD with permanent staff to Monitoring Organization

monitor launch campaigns should improve the U. S. government's
monitoring and oversight of these exports. 23 While establishment
of the May Face Difficulties

monitoring group is a positive step, DOD, State, and industry
officials have identified the following potential difficulties in
the effective implementation of the changes in monitoring.

 The monitoring organization is still being created. DOD's initial
plans called for two- thirds of the monitors to be active duty
military personnel. Current plans are to have all civilian
monitors. DOD and State officials are concerned that DOD may be
unable to recruit and 23 According to DOD officials, monitors in
the new organization will be clearly instructed not to provide
licensing advice to exporters as monitors have done in the past.

retain qualified civilian staff with the knowledge and expertise
necessary to conduct technical monitoring. 24 Active duty military
personnel may also be more familiar with the technologies that DOD

would like to protect.  The number of monitors available may be
insufficient. The legislative changes, as implemented, have
expanded the DOD monitors' responsibilities to all phases of the
launch campaign. Monitoring requirements may now apply to all the
various stages of the launch campaign, including interactions
between the satellite manufacturer, component supplier, launch
provider, and satellite user. Industry officials have expressed
concern that the number of monitors may not be adequate to cover
the broadened scope of activities that now require the presence of
DOD monitors. 25 License Processing Times

The March 15, 1999, change in licensing jurisdiction from Commerce
to Likely to Increase State will likely lengthen processing times
for satellite licenses. Longer processing times at State are
likely due to additional controls in State's licensing system. For
example, satellite- related export items under State's licensing
jurisdiction are subject to trade sanctions imposed against
nations that spread missile technology. 26 In addition, unlike
Commerce, State must notify Congress of any proposed export of
defense articles and defense services valued at $50 million or
more, including satellites. Congress has 30 days in which to
review license applications and raise any

objections. However, this process may take longer than 30 days
because State routinely briefs congressional staff on proposed
exports before sending a formal notification to Congress. These
briefings and the notification may be further delayed due to the
congressional schedule and other political considerations. 24 DOD
officials cited issues such as heavy travel schedules and lengthy
stays in unfavorable locations as reasons for potentially high
turnover rates among DOD monitors. 25 Industry officials have also
raised concerns about the requirement to reimburse DOD for
monitoring. Citing the increased number of activities requiring
monitoring and the likely number of monitors necessary to perform
these duties, industry officials are concerned that reimbursement
costs might become prohibitive and expressed reservations about
paying some overhead costs such as training.

26 In 1991 and 1993, the United States imposed Missile Technology
Control Regime- related sanctions on China for selling missile
equipment to Pakistan. While in force, these sanctions prohibited
the export of State- licensed satellites to China.

Our analysis of 29 satellite export license applications submitted
between 1993 and 1998 shows that processing times averaged 144
days at Commerce and 244 days at State. 27 Some of the difference
in processing times appears attributable to the congressional
notification requirement for State export licenses. For the one
State export license where data was available for

review, 84 days were attributable to the congressional
notification requirement. While less than State's, Commerce's
average processing times for satellite export licenses did not
meet the 90- day time requirement for ruling on license
applications set by a 1995 executive order on the administration
of export controls. 28

Additional delays in license processing times for satellites may
be expected because State has not provided its Office of Defense
Trade Controls with adequate resources to perform its expanded
mission. In a June 1999 report, State's Office of Inspector
General found that inadequate resources have made it increasingly
difficult for State's Office of Defense Trade Controls to manage
the Munitions List licensing process. The report notes that the
office is understaffed and export licensing officers are paid less
and expected to do more than comparable staff at DOD and Commerce.
According to the report, since 1993 license processing times have
more than doubled, and these increased times have hurt U. S.
businesses, which are forced to wait for licenses. The Inspector
General's report recommended that State provide the Office of
Defense Trade Controls with resources to hire additional staff to
address increased workloads and make the pay structure for
licensing officers comparable to other agencies. State

officials indicated that as of July 1999, it planned to provide
funds for hiring about 17 additional staff-- 6 fewer positions
than requested by the Office of Defense Trade Controls. Moreover,
the hiring of additional staff could take 6 months or longer, and
State does not plan to increase the pay structure of its licensing
officers. After an internal study of the issue, State concluded
that its licensing officers are appropriately compensated. 27 We
calculated processing times for 26 Commerce and 3 State satellite
export licenses involving launches by China and Russia. Processing
time data was not available for all 43 launch campaigns examined
in this report. In reviewing the China export licenses, we
included only satellite export licenses for which each agency was
responsible for obtaining a waiver to the Tiananmen Square
sanctions on satellite exports to China. Satellite licenses issued
by Commerce for which Tiananmen waivers were obtained through
State were not included in our analysis. 28 Executive Order 12981,
December 5, 1995.

Conclusion Given the scope, complexity, and shared responsibility
in implementing export controls on the use of foreign launch
vehicles, the agencies' differing policies and, at times, the
ineffective implementation of these policies were critical flaws
that contributed to many of the problems now being investigated.
While the recent legislative changes will improve controls over
such exports, effective interagency implementation is still needed
to help ensure that safeguards are in place and sensitive
technology is not improperly released in the future.
Recommendation We recommend that the Secretary of State consult
with DOD and Commerce for the purpose of establishing clear roles
and responsibilities for all agencies and overseas posts in
implementing the

government- to- government technical safeguards agreements and
ensuring compliance by U. S. exporters with U. S. satellite export
regulations. Agency Comments and

The Departments of State and Commerce provided written comments on
a Our Evaluation

draft of this report (see apps. II and III, respectively). DOD
reviewed a draft of this report but did not take an overall
position on its content. DOD, State, and Commerce provided
technical comments, which we incorporated where appropriate. State
concurred with our report and the recommendation to improve
interagency coordination on managing satellite exports. Commerce,
however, said that the 1996 change in licensing jurisdiction
resolved the interagency problems we identified and noted that the
congressional decision to return export licensing jurisdiction for
satellites to State in 1999 has adversely affected U. S. industry.
We do not agree that the 1996 transfer of jurisdiction resolved
the problems we identified. The agencies' differing policies and,
at times, poor coordination and implementation of U. S. government
policy were critical flaws in the process that contributed to many
of the problems now under investigation. Further, the shared
jurisdiction over technical data that continued after the 1996
transfer of jurisdiction for satellites to Commerce contributed to
the confusion by some satellite exporters over which agency
controlled technical data and what U. S. government policy was on
these exports.

Our report notes that the return of jurisdiction to State may
lengthen licensing processing times for exporters. This is due to
congressional notification requirements and the fact that State
has not allocated sufficient resources to its Office of Defense
Trade Controls to process export licenses in a timely manner.
Commerce cited several reports that exporters have already
experienced negative financial consequences from the return of
licensing jurisdiction to State. Although we have not verified
these reports, recent data on licensing process times provided by
State raise questions about the extent of any problems caused by
the change in jurisdiction. 29 To the extent these reports are
accurate, they reinforce our observation that implementation is
critical to effective satellite export control policies and that
adequate staff resources are essential for State to manage the

additional workload associated with the transfer in jurisdiction
for satellite exports.

As agreed with you, we plan no further distribution of this report
until 30 days from the date of its issuance, unless you publicly
announce its contents earlier. At that time, we will send copies
of this report to other congressional committees; the Honorable
William S. Cohen, Secretary of Defense; the Honorable Madeleine K.
Albright, Secretary of State; the Honorable William M. Daley,
Secretary of Commerce; and the Honorable Jacob Lew, Director,
Office of Management and Budget. Copies will also be made
available to others upon request. 29 According to State, the only
two satellite export licenses that were submitted and processed
between March 15, 1999, and August 20, 1999 (the first 6 months
after the transfer) and that required notification were processed
and formally notified to Congress in 49 and 131 days. As our
report notes, processing times at Commerce for satellites averaged
144 days. These two satellite cases may, however, understate the
actual average processing time since the data does not reflect
cases that were still under review as

of August 20, 1999.

If you or your staff have any questions concerning this report,
please call me at (202) 512- 4128. Key contacts and staff
acknowledgments are listed in appendix V.

Sincerely yours, Harold J. Johnson Associate Director
International Relations and Trade Issues

Letter 1 Appendix I

30 Possible Export Control Violations Under Review and

Related Monitoring Issues Appendix II

35 Comments From the Department of State

Appendix III 36

Comments From the Department of Commerce

Appendix IV 48

Objectives, Scope, and Methodology Appendix V

50 GAO Contact and Staff Acknowledgments

Related GAO Products 51

Tables Table 1: Launch Campaigns by Licensing Agency, 1989
February 1999 9

Table 2: Frequency of License Safeguards Required by the Lead
Licensing Agency, 1989  February 1999 11 Table 3: Launch Campaigns
Licensed Without Three Safeguards, 1989  February 1999 12 Table 4:
Launch Campaigns That Included Safeguards Only in State

Department Licenses 13 Table I. 1: Launch Campaigns With Possible
Technology Transfer,

Licensing, or Monitoring Issues, 1989- February 1999 32 Figures
Figure 1: Applicability of Space Launch Vehicle Technology to
Ballistic Missiles 7

Abbreviations

DOD Department of Defense

Possible Export Control Violations Under Appendi I x Review and
Related Monitoring Issues Department of State and Defense (DOD)
documents show that possible violations of export control
regulations may have occurred and related monitoring concerns have
been raised on 14 launch campaigns involving Chinese, Russian, and
Ukrainian launch vehicles licensed between 1989 and February 1999.
These problems and issues included unauthorized transfers of
technical information to China that could improve its launch
vehicles and missiles as well as unmonitored technical meetings
between U. S. satellite companies and foreign launch providers. In
addition, insurance companies may have been provided with
controlled technical

data on an unknown number of launch campaigns. State and Customs
are investigating several of these cases to determine exactly what
information may have been released. Table I. 1 lists these cases.

Table I. 1: Launch Campaigns With Possible Technology Transfer,
Licensing, or Monitoring Issues, 1989- February 1999 Satellite
Launch

Technology transfer/ export licensing issue Comments program
provider APMT China Hughes Electronics Corporation (Hughes) State
officials said that no sensitive technology was

requested and received approval for a dual citizen released. In
1999, Commerce notified Hughes that it of Canada and the People's
Republic of China to would deny its license application request to
export work on the Asia Pacific Mobile satellites to the APMT
project. Telecommunications satellite project in California. Not
reported by Hughes in its application or detected by State in its
review of the license application was that this person was also
reportedly the son of a senior Chinese military official
responsible for China's military satellite programs and was
directly involved in the APMT project. After learning of this
connection to the

Chinese military, State suspended the export license. Apstar 1A
China DOD did not monitor technical interface meetings DOD
officials cannot make assurances that no

or the launch. The satellite export license issued by unauthorized
transfers occurred because DOD Commerce did not require DOD
monitors at either monitors were not present. the launch or during
technical interface meetings.

Satellite Launch Technology transfer/ export licensing issue
Comments

program provider Apstar 2 China Hughes Space and Communications
Company Defense and State both reviewed the technical (Hughes)
conducted a failure review with China of assistance provided by
Hughes to China during its

the 1995 failed launch of the Apstar 2 satellite. failure review
work and concluded that the transfer Hughes informed Commerce of
its actions but did raised U. S. national security concerns. Both
agencies not obtain a State license to conduct a failure

agreed that the activities undertaken by Hughes were a review nor
did Hughes advise State or DOD of its defense service regulated by
State. Commerce actions. Hughes' launch- failure review activities
officials admitted that approving the release of the were
conducted without DOD monitors. Hughes

technical information was a mistake since such exports requested
and received Commerce approval to are under State's authority.
State concluded that the release at least some of its analyses of
the launch

information provided during the accident review to failure
(analyses that demonstrated problems with China was more detailed
than that provided during the the launch vehicle's fairing) to
China. Intelsat 708 review and served as a tutorial for the

Chinese in areas where their spacelift program was weak. State and
the Department of Justice are currently investigating this case.
DOD did not monitor technical interface meetings DOD officials
cannot make assurances that no

or the launch. The Chinese launch vehicle unauthorized transfers
occurred during the pre- launch

exploded after launch, destroying the rocket and technical
meetings or at the launch since they were not the satellite.

present. Asiasat 2 China Martin Marietta Aerospace assessed a
Chinese

According to State officials, State reviewed the impact company's
testing of a kick motor to be used to of this technology transfer
and found that it represented place the satellite into orbit.
Martin Marietta did not a loss of technology but did not
significantly harm obtain an export license to carry out work on
the

national security. The transfer reportedly would allow kick motor
and faxed and mailed 10 copies of the

China to focus its research efforts, and this information unedited
analysis of the Chinese kick motor to its

may have applications to its ballistic missile programs. Chinese
satellite customer prior to DOD review. State officials indicated
that an export license was DOD monitors may have advised Martin
Marietta required for this work, and it is continuing the that
some of this work with China on its kick motor

investigation. was permitted, and DOD monitors attended a meeting
on the kick motor in China. Company officials also said that this
work was permitted under a Commerce export license.

Asiasat 3 Russia After the failure of the launch vehicle to
properly State officials believe that the European company place
the satellite into orbit, the Russians needed an export license to
participate in the failure performed a launch- failure review.
Lockheed Martin review. They are, however, continuing their
requested and received an export license from investigation into
this case to determine where State to participate, on a limited
basis, in the

technical discussions were held and exactly what types review.
However, a European satellite company

of technical discussions the company participated in. participated
in the Lockheed Martin failure review analysis of the launch
failure and did not have an export license to do so. DOD monitors
may have advised the European company that it could

participate in this failure review, largely reviewing and
assessing the Russian findings, under certain restrictions without
a State license.

Satellite Launch Technology transfer/ export licensing issue
Comments

program provider The U. S. satellite operator COMSAT may have
State has referred this matter to the U. S. Customs provided
technical assistance to an Asian satellite Service for criminal
investigation and possible operator without authorization. The
company may

prosecution by the Department of Justice. have also passed
technical information from the Asiasat 3 failure review to
Asiasat, a Hong Kong- based company partially owned by the Chinese
government.

Astra Russia Lockheed Martin voluntary disclosed to State the
Lockheed Martin realigned its internal control release of
controlled information and the holding of procedures and practices
to ensure future compliance technical meetings before a signed
agreement was

with export control regulations. returned to State. These
violations were largely technical in nature. Chinasat 7 China DOD
did not monitor the launch or technical DOD officials cannot make
assurances that no

interface meetings. The satellite export license unauthorized
transfers occurred since they were not issued by Commerce did not
require DOD monitors present. at either the launch or during
technical interface meetings.

Chinastar China DOD did not monitor technical meetings but did DOD
officials cannot make assurances that no

monitor the launch. The satellite export license unauthorized
transfers occurred because DOD issued by Commerce did not require
DOD monitors monitors were not present. at either the launch or
during technical meetings. Lockheed Martin requested and paid for
a DOD

monitor to attend the launch. A U. S. company reportedly assisted
China by DOD monitors, while monitoring Lockheed Martin's
providing consulting services, including analyzing

activities at the launch site, first encountered officials
satellite test results and performance measures.

from this U. S. company at technical meetings. DOD Though the
company had applied to State for a monitors were forced to stop at
least two meetings license, and this request had been tentatively
because the company's officials allegedly were approved, the
license was apparently never providing information beyond what was
allowed in the

finalized and made valid because the company government- to-
government safeguards agreement. never completed a technology
transfer control plan. State is currently investigating this case
and has

DOD officials also indicated that the company referred the matter
to the U. S. Customs Service for never submitted any technical
documents for investigation.

clearance for release to China. Echostar 1 China The satellite
export license issued by Commerce DOD officials cannot make
assurances that no did not require DOD monitors at either the
launch

unauthorized transfers occurred during unmonitored or during
technical meetings. According to pre- launch technical meetings
because DOD monitors Lockheed Martin, DOD did monitor some were
not present.

prelaunch technical meetings. Lockheed Martin reportedly paid for
a DOD monitor to attend the launch. Faisat 1 Russia The satellite
export license issued by Commerce

DOD monitoring officials stated that while Air Force did not
require DOD monitors at either the launch

personnel attended the launch activities, they were not or during
technical meetings. U. S. Air Force from and did not report to
DOD's monitoring program. personnel did attend launch activities.
DOD officials cannot make assurances that no unauthorized
transfers occurred because DOD monitors were not present.

Satellite Launch Technology transfer/ export licensing issue
Comments

program provider Intelsat 708 China Space Systems Loral and Hughes
participated in Both Defense and State concluded that the an
independent review of the causes of the 1996

unauthorized transfers of technology had direct catastrophic
failure of the Chinese Long March 3B applicability to China's
military systems, including its launch vehicle. Neither company
applied for an ballistic missile programs and raise U. S. national
export license to perform this work. The review security concerns.
Space System Loral and Hughes

committee's charters included making an are under investigation by
the U. S. Customs Service

independent assessment of the cause of the failure and the U. S.
Attorney's Office for the District of and providing
recommendations to the Chinese Columbia. launch provider.
Insurance companies pressured China into having an independent
western review of the causes of the failure, and China requested

Loral and Hughes to participate. Optus B2 China Hughes conducted a
failure review of the 1992 According to State, because it is
unclear what failure of the Long March 2E launch vehicle. DOD
information was provided to China, no assessment of monitors may
not have been present at all national security harm could be
performed. State and

meetings with Chinese officials and may have the Department of
Justice are currently investigating advised Hughes that it could
perform some work this case. without a new State license. One
technical paper pointing to the cause and indicating what could be
done to fix the problem may have been released to China without
DOD review and approval. According

to the exporter, DOD monitors attended all technical meetings and
authorized the release of technical information given to the
launch provider. Optus B3 China The satellite export license
issued by Commerce According to the exporter, DOD monitored all
technical did not require DOD monitors at either the launch
meetings. Documentation indicates that DOD did or during technical
meetings. Nevertheless, DOD

monitor many of the technical meetings. However, monitored many
technical meetings and sent a DOD monitors stated that they do not
believe that all monitor to the launch, exercising its option of
technical discussions were monitored. Some paying for the cost of
monitoring. pre- launch meetings included discussions of changes
being made to the launch vehicle's fairing. These changes were
being made in response to the Optus B2 accident review and
pressure by Hughes to fix the problem. State is reviewing this
case as part of its overall investigation of the Optus B2 and
Apstar 2 launch campaigns.

Sea Launch Ukraine The Boeing Company exported technical data
State officials stated that these violations did not before an
export license was requested and

impact national security. The technical data involved approved and
without DOD review. State was generally of foreign origin. In
September 1998, documents indicate that technical data was also
State and Boeing signed a consent agreement that exported that was
outside the scope of the

assessed Boeing $10 million in penalties and required subsequently
approved licenses, and the company Boeing to establish a more
rigorous compliance did not notify DOD of all technical meetings.
State program including assigning export compliance charged the
company with 207 violations of the

responsibility to Boeing's Office of General Counsel export
control regulations. and Executive Counsel. Of the $10 million in
penalties, $2.5 million could be spent on the company's improved

compliance program. The Department of Justice is conducting a
criminal investigation into this case.

Satellite Launch Technology transfer/ export licensing issue
Comments

program provider Multiple Various As part of many launch
campaigns, insurance State is currently reviewing the business
practice of companies have been given controlled technical
providing controlled technical data to insurance data without an
export license. The satellite makers companies and the control of
that data by insurance would provide data on the satellite and
launch companies. The insurance industry and the space vehicle in
order to obtain insurance for their launch. launch/ satellite
industry are also studying the practices The insurance companies
are often foreign and

to determine a method in which information can be may be brokers
for numerous international provided. Conclusions of this study
will be reviewed by insurance firms. It was pressure from the
insurance

State. companies that pushed China into asking Loral and Hughes to
participate in the review of the Intelsat VII failure.

Source: Compiled by GAO from State and DOD documents.

Appe ndi I I x Comments From the Department of State

Comments From the Department of Appendi I I I x Commerce Note: GAO
comments supplementing those in the

report text appear at the end of this appendix.

See comment 1.

See comment 2. See comment 3. See comment 4.

See comment 5.

See comment 4.

See comment 6. See comment 7.

See comment 8. See comment 9. See comment 10. See comment 11.

See comment 12.

See comment 9. Now on pp. 4- 5. See comment 9.

See comment 13. Now on p. 8. See comment 14.

Now on p. 7. See comment 15.

Now on p. 8. See comment 16.

Now on p. 8. See comment 9. Now on p. 11. See comment 2.

Now on p. 13. See comment 5.

See comment 17. See comment 18. Now on p. 16. See comment 1.

Now on pp. 19. See comment 19.

See comment 20. See comment 21. See comment 2.

Now on p. 24. See comment 16.

See comment 22.

The following are GAO's comments on the Department of Commerce's
letter dated August 17, 1999. GAO Comments 1. We do not agree that
the 1996 transfer of jurisdiction resolved the problems we
identified. As noted in our report and reflected in our
recommendation, the agencies' shared jurisdiction over satellite
exports, inconsistent approaches to applying conditions to
safeguard technology, and, at times, poor coordination and
implementation of U. S. government

policy were critical flaws in the process that contributed to many
of the problems now being investigated. Further, jurisdiction over
these satellite exports continued to be shared after 1996, with
State responsible for licensing exports of technical data that
exceeded the limits of form, fit, function data under Commerce's
control. This shared jurisdiction over technical data contributed
to some confusion by satellite exporters over which agency
controlled technical data and what U. S. government policy

was on these exports. 2. The objectives of this review were to
assess how the licensing agencies applied safeguards to satellite
exports, what problems have been reported, and whether recent
legislative changes address these problems. In this report, we did
not assess whether the President's 1996 decision to transfer
jurisdiction for satellite export licensing to Commerce was a
correct decision. 3. Commerce licenses did not consistently
include conditions requiring adherence to the government- to-
government technology safeguards agreements. As noted in tables 3
and 4, Commerce licenses for 13 launch campaigns between 1993 and
1996 did not include a condition requiring the

exporter to comply with safeguards agreements. It was not until
1997, after DOD repeatedly raised concerns and months of
negotiation, that Commerce agreed to include this as a standard
condition.

4. As the report states, DOD and State did not consistently
recommend that Commerce include all the license conditions that
State had used because they assumed that these requirements would
be added to State- issued licenses for technical data for these
launch campaigns. The satellite exporters in the eight cases where
conditions were omitted did not obtain separate State technical
assistance licenses. Commerce licenses after the 1996 transfer did
contain the license condition, but only because DOD and State had
become aware that unmonitored launch campaigns had occurred and
insisted that Commerce begin including this condition in every
license.

The decision to include these conditions was not directly related
to the President's decision to transfer licensing jurisdiction to
Commerce. 5. While Commerce licenses before 1997 authorized the
export of only form, fit, and function technical data, Commerce
did not include on these licenses a safeguard or control mechanism
to insure that this happened. Tables 3 and 4 show that Commerce
licenses prior to January 1997 did not include requirements that
exporters prepare technology transfer control

plans. Commerce's position that the plans were not necessary prior
to 1997 because the technology under its control was releasable
overlooks the role of these plans in preventing the release of
technology that is not releasable. The plans provide an internal
control mechanism for the U. S. government and the exporter to
insure that technical data beyond what is authorized for export is
not released. It is through procedures established in these plans
that DOD reviews technical data prior to release to the

launch service provider. Further, as noted in the report, DOD and
State officials assumed that the exporter would have to obtain a
State technical assistance license to perform the launch and that
this would provide a vehicle to apply controls over technical
assistance and data exchange during the launch.

6. As we have noted, the problems we identified are much broader
than simply what conditions Commerce or State placed on satellite
export licenses. Commerce and State did not clearly define the
limits of technical data controlled by each agency and, until
after 1996, imposed different safeguards on these exports. In
addition, Commerce, State, and DOD have not developed an
interagency understanding clarifying the roles and
responsibilities each will play in implementing U. S. policy on
satellite exports. Our recommendation in this report directly
addresses this situation.

7. The conditions imposed by Commerce after October 1996 mirrored
the controls used by State since the first authorized export in
1989. As Commerce notes, the imposition of conditions on licenses
to safeguard sensitive technology may not be effective if these
safeguards are not effectively implemented. The problems with the
Apstar 2 and Intelsat 7

failure reviews discussed in the Select Committee's report
underscore the need for coordinated policy and interagency
implementation of U. S. export controls on satellites. This is why
our report recommends that State, in coordination with DOD and
Commerce, establish clear roles and responsibilities for all
agencies and overseas posts in implementing U. S. policy on these
exports.

8. Our report did not find that the 1996 transfer of jurisdiction
resolved the problems we identified. As noted in our report, the
agencies' differing policies and, at times, poor coordination and
implementation of U. S. government policy were critical flaws in
the process that contributed to many of the problems now being
investigated. Further, jurisdiction over these satellite exports
continued to be shared after 1996, with State

responsible for licensing exports of technical data that exceeded
the limits of form, fit, and function data under Commerce's
control. The shared jurisdiction over technical data created
ambiguity and some confusion for exporters on how the U. S.
government controlled this information. 9. The information in our
report is accurate as presented. 10. We do not agree that the
technology was low level. DOD has concluded that the technology
transferred in some of these cases may have

improved China's ballistic missile programs. 11. We disagree with
Commerce's characterization of the House Select Committee's
report, U. S. National Security and Military/ Commercial Concerns
with the People's Republic of China. As noted in the report (Vol.
II, p. 171), DOD found that the technology transferred could
improve China's launch vehicle guidance systems. Specifically, a
1997 DOD analysis, as quoted in the report, stated that
significant benefits derived by China from these activities are
likely to lead to improvements in the overall reliability of their
launch vehicles [rockets] . . . and in particular their guidance
systems. [emphasis added]. Moreover, a May 1999 report by the
Senate Select Committee on Intelligence notes that while,
initially, the intelligence community agencies differed on the
significance of technology transfer in the Intelsat 708 accident
investigation, they subsequently agreed that the information could
help China's design and test practices and the

reliability of its space launch vehicles. While acknowledging that
differences remain within the intelligence community as to the
likelihood that China has used this information, the Senate report
concludes that the information transferred in the Apstar 2 and
Intelsat 708 launch failure investigations may improve China's
space launch and ballistic missile programs.

12. Under the Export Administration Act, Commerce is to consider
national security issues in reviewing export applications.
However, under the act, Commerce is charged with weighing U. S.
economic and trade interests with national security and foreign
policy interests when deciding when an item should be controlled.
Under the Arms Export Control Act,

economic interests are not cited as a factor to be considered by
State in establishing the Munitions List or reviewing munitions
export applications. 13. The sentence as written is accurate.
Commerce's language suggests that only State controls items
subject to the Wassenaar Arrangement and the Missile Technology
Control Regime. However, many items under Commerce's jurisdiction
are subject to the controls of the Wassenaar Arrangement and the
Missile Technology Control Regime. As Commerce and our report
note, State, under its regulations, controls technology related to
launch vehicles. 14. The statement in our report is accurate. The
1993 government- to- government technology safeguards agreement
with China states [ t] he Government of the United States of
America shall [emphasis added] oversee and monitor implementation
of the Technology Control Plan, and the Government of the People's
Republic of China shall permit and facilitate that monitoring. The
agreements with Russia, Ukraine, and Kazakhstan contain similar
language.

15. The graphic prepared by the Central Intelligence Agency shows
the applicability of space launch vehicle technology to ballistic
missiles. In a missile application, the fairing is referred to as
a shroud and is used on ballistic missiles with multiple reentry
vehicles and multiple independently

targeted reentry vehicles. 16. We have incorporated the suggested
changes, as appropriate. 17. Since licensing jurisdiction for
certain commercial communications satellites was first moved to
Commerce in 1992, Commerce has been responsible for issuing
guidance on the export of satellites under its jurisdiction. The
government- to- government technology safeguards agreements, first
negotiated with China in 1988, clearly articulated U. S. interests
in ensuring that sensitive technology was not transferred during
these launch campaigns. The absence of regulatory guidance was not
a problem for State. As we note in our report, State consistently
required DOD monitors at technical meetings and at the launch and
the preparation of technology transfer control plans. 18. This
document was neither classified nor restricted and was made
available to satellite exporters by State. The agreements with
China, signed in 1989 and 1993, were made publicly available and,
as noted in our report,

State consistently required compliance with the agreements from
the first launch licensed in 1989. 19. The discussion in this
section shows the lack of coordination by Commerce when it
approved the release of sensitive technical data applicable to
China's launch vehicles. U. S. policy, as articulated in the
government- to- government technology safeguards agreements, is
that no technology may be released that could improve a foreign
country's launch vehicle since this technology could also be used
to improve a country's ballistic missiles. As the Select Committee
report notes, China's experience and knowledge of the aerodynamic
and other loading

conditions and environments on rocket fairings, and the structural
design process taking these conditions into account, would stand
them in good stead in developing fairings (or shrouds) for
ballistic missiles. 20. Commerce correctly states that a positive
contribution of the legislation is the creation of a new Space
Launch Monitoring Division at DOD to support the monitoring
requirements as specified in the export licenses. As we note in
our report, the recent legislative changes will also address some
of the other apparent causes of the export licensing problems by
reducing any confusion caused by shared export licensing
jurisdiction over technical data. 21. The Select Committee's
report did not assess whether the licensing conditions imposed by
Commerce beginning in January 1997 worked well in protecting
national security. 22. We obtained written permission from the
companies in August 1999 to release the information on the launch
campaigns in Russia.

Appendi V I x Objectives, Scope, and Methodology In response to
congressional concern regarding the licensing of satellite
exports, we assessed the safeguards applied to the export of U. S.
commercial communications satellites for launch by Chinese,
Russian, and Ukrainian launch vehicles from 1989, when the first
launch was approved, to February 1999. Specifically, we (1)
identified the license conditions applied by Commerce and State
during the export licensing process to protect sensitive
technology and (2) determined whether State and DOD identified
possible unauthorized technology transfers and violations of
export control regulations with these launches. In addition, we
assessed whether recent legislative changes will reduce the risks
of unauthorized exports of sensitive U. S. technology. To identify
the types of safeguards that have been applied to foreign
launches, we researched applicable export regulations; reviewed
government- to- government technology security agreements with
China, Russia, Ukraine, and Kazakhstan related to satellite
technology safeguards; and interviewed State, Commerce, and DOD
licensing officials. We then identified the rights of the United
States in those foreign countries under the technology security
agreements to safeguard technology and compared the rights with
the actual license conditions imposed on U. S. exporters by
Commerce and State.

To determine if Commerce and State included safeguards in export
licenses for the launches of U. S. commercial communications
satellites on Chinese, Russian, and Ukrainian launch vehicles, we
first identified the universe of relevant export licenses approved
from the time launches by China were first authorized in 1989
until February 1999. We reviewed State and Commerce license
databases, requested the major satellite manufacturers to provide
information on these cases, and reviewed license documentation and
other memoranda maintained by DOD. Because we were interested in
the licensing actions of State and Commerce, we included in our
review all licenses issued for the export of commercial
communications satellites for launch by China, Russia, and Ukraine
regardless of whether the launch provider was later changed and
the satellite was launched by another country. We did not include
in our analysis exports of satellite components. We did not
perform work to assess the actual implementation of these export
license requirements. For example, we did not review the adequacy
of technology transfer control plans or the training of DOD
monitors, nor did we monitor an overseas launch campaign. At the
time of our review, both the Senate Select Committee on
Intelligence and the House Select

Committee on U. S. National Security and Military/ Commercial
Concerns with the People's Republic of China were conducting
investigations into the implementation of these conditions. To
determine whether unauthorized technology transfers and violations
of export regulations on launches by China, Russia, and Ukraine
have been identified, we interviewed DOD, State, and Commerce
officials. We also interviewed DOD officials who monitored some of
the launches and reviewed licensing records, DOD monitor trip
reports, export violation settlement documents, and other relevant
documentation when available. This review included examining
thousands of documents provided by DOD and State to Congress in
response to the numerous congressional hearings held on this
subject in 1998. In addition, in several cases, we discussed the
various allegations with the satellite companies involved.
Investigations of many of the compliance problems with the
launches by China and Russia cited in our report were still
ongoing at the time of our review. To determine whether sensitive
technology was released as a result of these compliance problems,
we interviewed DOD officials and monitors responsible for
monitoring overseas launches and asked State and DOD

officials if any damage assessments had been performed on these
cases. We reviewed the damage assessments performed by State and
DOD on the two cases where such studies had concluded that
sensitive technology had been transferred. In many of the
compliance problems we cited, the investigations were new or
ongoing, and damage assessments had not been performed at the time
of our review. To determine whether recent legislative changes
have reduced the risks of unauthorized transfers of sensitive U.
S. technology, we first reviewed the compliance problems that had
been identified with these exports. We interviewed State, DOD,
Commerce, and industry officials on their views of the causes of
these problems. We then compared the changes mandated by the
fiscal year 1999 National Defense Authorization Act and State's
planned implementation of these changes. We also solicited
comments on these recent changes from satellite manufacturers and
operators. We conducted our review between August 1998 and June
1999 in accordance with generally accepted government auditing
standards.

Appe ndi V x GAO Contact and Staff Acknowledgments GAO Contact
James Shafer (202) 512- 6002 Acknowledgments In addition to the
name above, David C. Trimble, Eugene Beye, Jiyearn Chung, and
Judith Knepper made key contributions to this report.

Related GAO Products Export Controls: 1998 Legislative Mandate for
High Performance Computers (GAO/NSIAD-99-208, Sept. 24, 1999).

Export Controls: Information on the Decision to Revise High
Performance Computer Controls (GAO/NSIAD-98-196, Sept. 16, 1998).

Export Controls: National Security Issues and Foreign Availability
for High Performance Computer Exports (GAO/NSIAD-98-200, Sept. 16,
1998). Export Controls: Changes in Controls Applied to the Export
of High Performance Computers (GAO/T-NSIAD-98-250, Sept. 16,
1998). Evolved Expendable Launch Vehicle: DOD Guidance Needed to
Protect Government's Interest (GAO/NSIAD-98-151, June 11, 1998).
Export Controls: Issues Related to the Export of Communications
Satellites (GAO/T-NSIAD-98-208, June 10, 1998). China: U. S. and
European Union Arms Sales Since the 1989 Embargoes (GAO/T-NSIAD-
98-171, Apr. 28, 1998). Hong Kong's Reversion to China: Effective
Monitoring Critical to Assess U. S. Nonproliferation Risks
(GAO/NSIAD-97-149, May 22, 1997). Export Controls: Sales of High
Performance Computers to Russia's Nuclear Weapons Laboratories
(GAO/T-NSIAD-97-128, Apr. 15, 1997).

Export Controls: Change in Export Licensing Jurisdiction for Two
Sensitive Dual- Use Items (GAO/NSIAD-97-24, Jan. 14, 1997).

Export Controls: Sensitive Machine Tool Exports to China
(GAO/NSIAD-97-4, Nov. 19, 1996). Export Controls: Sale of
Telecommunications Equipment to China (GAO/NSIAD-97-5, Nov. 13,
1996). Nuclear Weapons: Russia's Request for the Export of U. S.
Computers for Stockpile Maintenance (GAO/T-NSIAD-96-245, Sept. 30,
1996).

National Security: Impact of China's Military Modernization in the
Pacific Region (GAO/NSIAD-95-84, June 6, 1995).

Export Controls: Issues Concerning Sensitive Stealth- Related
Items and Technologies (GAO/T-NSIAD-95-158, May 11, 1995). Export
Controls: Concerns Over Stealth- Related Exports (GAO/NSIAD-95-
140, May 10, 1995). Export Controls: Some Controls Over Missile-
Related Technology Exports to China Are Weak (GAO/NSIAD-95-82,
Apr. 17, 1995).

Export Controls: License Screening and Compliance Procedures Need
Strengthening (GAO/NSIAD-94-178, June 14, 1994). Nuclear
Nonproliferation: Export Licensing Procedures for Dual- Use Items
Need to Be Strengthened (GAO/NSIAD-94-119, Apr. 26, 1994). Export
Controls: Issues in Removing Militarily Sensitive Items From the
Munitions List (GAO/NSIAD-93-67, Mar. 31, 1993).

Export Controls: Actions Needed to Improve Enforcement (GAO/NSIAD-
94-28, Dec. 30, 1993).

job code Let r e t

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