Export Licensing

GAO reviewed the role of the Departments of Defense (DOD) and Commerce in export licensing, specifically: (1) how DOD developed its licensing recommendations; and (2) how Commerce responded to the DOD recommendations with licensing decisions.

GAO noted that a 1985 presidential directive authorized DOD to review export applications to selected free-world countries and make licensing recommendations to Commerce. GAO found that: (1) between April 1 and April 12, 1985, Commerce approved 65 percent of the license applications that DOD wanted to deny and denied about 1 percent of the licenses that DOD wanted to approve; (2) DOD recommends denials based on general information about the end users, while Commerce denies licenses based on specific adverse information related to individual license applications; (3) DOD recommended denials if the users did much of their business with unauthorized countries, did not appear to be in business, had businesses that were inconsistent with end-use statements in the applications, or supplied insufficient information on their applications; (4) DOD did not share with Commerce all of the information it used to support its recommendations; (5) DOD began to support its recommendations with more specific information later in 1985; and (6) DOD and Commerce disagreed on the appropriateness of issuing export licenses when the foreign purchasers planned to resell the items to unauthorized customers.