Nonproliferation
Improvements Needed to Better Control Technology Exports for Cruise Missiles and Unmanned Aerial Vehicles Gao ID: GAO-04-175 January 23, 2004Cruise missiles and unmanned aerial vehicles (UAV) pose a growing threat to U.S. national security interests as accurate, inexpensive delivery systems for conventional, chemical, and biological weapons. GAO assessed (1) the tools the U.S. and foreign governments use to address proliferation risks posed by the sale of these items and (2) efforts to verify the end use of exported cruise missiles, UAVs, and related technology.
The growing threat to U.S. national security of cruise missile and UAV proliferation is challenging the tools the United States has traditionally used. Multilateral export control regimes have expanded their lists of controlled technologies, but key countries of concern are not members. U.S. export control authorities find it increasingly difficult to limit or track unlisted dual-use items that can be acquired without an export license. Moreover, a gap in U.S. export control authority enables American companies to export certain dual-use items to recipients that are not associated with missile projects or countries listed in the regulations, even if the exporter knows the items might be used to develop cruise missiles or UAVs. American companies have in fact legally exported dualuse items with no U.S. government review to a New Zealand resident who bought the items to build a cruise missile. The U.S. government seldom uses its end-use monitoring programs to verify compliance with conditions placed on the use of cruise missile, UAV, or related technology exports. For example, State officials do not monitor exports to verify compliance with license conditions on missiles or other items, despite legal and regulatory requirements to do so. Defense has not used its end-use monitoring program initiated in 2002 to check the compliance of users of more than 500 cruise missiles exported between fiscal years 1998 and 2002. Commerce conducted visits to assess the end use of items for about 1 percent of the 2,490 missile-related licenses we reviewed. Thus, the U.S. government cannot be confident that recipients are effectively safeguarding equipment in ways that protect U.S. national security and nonproliferation interests.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-175, Nonproliferation: Improvements Needed to Better Control Technology Exports for Cruise Missiles and Unmanned Aerial Vehicles
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Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform,
House of Representatives:
United States General Accounting Office:
GAO:
January 2004:
Nonproliferation:
Improvements Needed to Better Control Technology Exports for Cruise
Missiles and Unmanned Aerial Vehicles:
GAO-04-175:
GAO Highlights:
Highlights of GAO-04-175, a report to Chairman, Subcommittee on
National Security, Emerging Threats, and International Relations,
Committee on Government Reform, House of Representatives
Why GAO Did This Study:
Cruise missiles and unmanned aerial vehicles (UAV) pose a growing
threat to U.S. national security interests as accurate, inexpensive
delivery systems for conventional, chemical, and biological weapons.
GAO assessed (1) the tools the U.S. and foreign governments use to
address proliferation risks posed by the sale of these items and (2)
efforts to verify the end use of exported cruise missiles, UAVs, and
related technology.
What GAO Found:
The growing threat to U.S. national security of cruise missile and UAV
proliferation is challenging the tools the United States has
traditionally used. Multilateral export control regimes have expanded
their lists of controlled technologies, but key countries of concern
are not members. U.S. export control authorities find it increasingly
difficult to limit or track unlisted dual-use items that can be
acquired without an export license. Moreover, a gap in U.S. export
control authority enables American companies to export certain dual-
use items to recipients that are not associated with missile projects
or countries listed in the regulations, even if the exporter knows the
items might be used to develop cruise missiles or UAVs. American
companies have in fact legally exported dual-use items with no U.S.
government review to a New Zealand resident who bought the items to
build a cruise missile.
The U.S. government seldom uses its end-use monitoring programs to
verify compliance with conditions placed on the use of cruise missile,
UAV, or related technology exports. For example, State officials do
not monitor exports to verify compliance with license conditions on
missiles or other items, despite legal and regulatory requirements to
do so. Defense has not used its end-use monitoring program initiated
in 2002 to check the compliance of users of more than 500 cruise
missiles exported between fiscal years 1998 and 2002. Commerce
conducted visits to assess the end use of items for about 1 percent of
the 2,490 missile-related licenses we reviewed. Thus, the U.S.
government cannot be confident that recipients are effectively
safeguarding equipment in ways that protect U.S. national security and
nonproliferation interests.
What GAO Recommends:
The Secretary of Commerce should assess and report to the Committee on
Government Reform on the adequacy of an export administration
regulation provision to address missile proliferation by nonstate
actors and on ways the provision might be modified.
The Secretaries of State, Commerce, and Defense each should complete a
comprehensive assessment of cruise missile, UAV, and related dual-use
transfers to determine if U.S. exporters and foreign end users comply
with conditions related to the transfers.
Commerce and Defense partially agreed with the recommendations. State
disagreed to complete an assessment, but said it would pay special
attention to the need for more checks on cruise missile and UAV
transfers.
www.gao.gov/cgi-bin/getrpt?GAO-04-175.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Joseph A. Christoff
at (202) 512-8979 or christoffj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Proliferation of Cruise Missiles and UAVs Poses a Growing Threat to
U.S. National Security Interests:
Key Nonproliferation Tools Have Limitations Addressing Cruise Missile
and UAV Proliferation:
Compliance with Conditions on Exports of Cruise Missiles, UAVs, and
Related Dual-use Items Seldom Verified through End-use Monitoring:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Commerce:
GAO Comments:
Appendix III: Comments from the Department of Defense:
Appendix IV: Comments from the Department of State:
GAO Comments:
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Figures:
Figure 1: Diagram of a Cruise Missile:
Figure 2: Examples of UAVs:
Figure 3: Chinese SILKWORM Cruise Missile in Iraq:
Figure 4: Black Shaheen Cruise Missile:
Figure 5: Predator B UAV:
Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years
1998-2002:
Figure 7: Destinations of Dual-use Approved Licenses for Chokepoint
Technologies, Fiscal Years 1998-2002, by Country:
Abbreviations:
DOD: Department of Defense:
EAR: Export Administration Regulations:
ICE: Bureau of Immigration and Customs Enforcement:
MTCR: Missile Technology Control Regime:
PSV: post-shipment verification:
UAV: unmanned aerial vehicle:
WMD: weapons of mass destruction:
United States General Accounting Office:
Washington, DC 20548:
January 23, 2004:
The Honorable Christopher Shays:
Chairman:
Subcommittee on National Security, Emerging Threats, and International
Relations:
Committee on Government Reform:
House of Representatives:
Dear Mr. Chairman:
Efforts to limit the proliferation of cruise missiles and unmanned
aerial vehicles (UAV) are complicated by the availability of these
items among countries of concern.[Footnote 1] An unmanned aerial
vehicle, a pilotless vehicle that operates like an airplane, can be
used for a variety of military and commercial purposes. A cruise
missile is an unmanned aerial vehicle with the airframe designed for
one-time use, which travels through the air like an airplane before
delivering its payload. The U.S. government faces trade-offs when
making decisions about transfers of cruise missiles, UAVs, or related
technology. U.S. policy aims to prevent the proliferation of these
weapons systems to countries of concern and terrorists. At the same
time, the U.S. government has an interest in encouraging transfers of
cruise missiles and UAVs to U.S. allies to support regional security
and bilateral relations. The U.S. government also wants to use these
sales to help maintain the health of the U.S. defense industrial base.
To accomplish these goals, the U.S. government regulates the export of
cruise missiles, UAVs, or related technology through three agencies:
the Departments of State, Commerce, and Defense.
You asked us to assess U.S. and international efforts to limit the
proliferation of cruise missiles, unmanned aerial vehicles, and related
technology. Specifically, this report (1) describes the nature and
extent of cruise missile and UAV proliferation; (2) assesses the
nonproliferation tools that the United States and other governments use
to address the proliferation risks posed by the sale of these items;
and (3) assesses U.S. and other governments' efforts to verify the end
use of exported cruise missiles, UAVs, and related technology.
To address these issues, we reviewed analyses prepared by the
Departments of State, Commerce, Defense, and Homeland Security, and the
U.S. intelligence community, as well as studies prepared by
nonproliferation experts. We also reviewed multilateral export control
regime documentation; met with representatives of the Missile
Technology Control Regime (MTCR) in Paris, France; and interviewed
government officials in France, Italy, and the United Kingdom.
Furthermore, we analyzed export licensing information from the
Departments of State, Commerce, and Defense on exports of cruise
missiles, UAVs, and related dual-use technology that have both military
and civilian applications. For more on our scope and methodology, see
appendix I.
Results in Brief:
Cruise missiles and UAVs pose a growing threat to U.S. national
security interests as accurate and inexpensive delivery systems for
conventional, chemical, and biological weapons. Conventional anti-ship
cruise missiles pose an immediate threat to U.S. naval vessels because
of the widespread availability of these weapons worldwide. In addition,
land-attack cruise missiles pose a future threat to the U.S. homeland
because of the anticipated growth in the availability of these more
accurate, longer-range systems between 2005 and 2015. U.S. government
projections show that the numbers of producers of cruise missiles and
UAVs will increase to include countries where the United States is
concerned about missile proliferation activities. At least 70 nations
currently possess some type of anti-ship missiles armed with
conventional, high explosive warheads. Currently, at least 32 nations
are developing or manufacturing more than 250 models of UAVs. The
widespread availability of commercial items, such as global positioning
systems and lightweight engines, has made it easier for countries and
terrorists to acquire or build at least rudimentary cruise missile or
UAV systems.
The United States and other governments use multilateral export control
regimes and national export controls to address the threat associated
with cruise missile and UAV proliferation. The United States has made
some advances using the regimes to address the threat of cruise missile
and UAV proliferation, but both tools have limitations. For example,
between 1997 and 2002, the United States and other governments
successfully revised the MTCR's control lists of sensitive missile-
related equipment and technology to include six of eight U.S.-proposed
items related to cruise missile and UAV technology. Adding items to the
control lists commits regime members to provide greater scrutiny when
deciding whether to license the items for export. Despite the efforts
of these regimes, nonmembers such as China and Israel continue to
acquire, develop, and export cruise missile or UAV technology. This
growing capability of nonmember supplier countries to develop
technologies used for weapons of mass destruction and trade them with
other countries of proliferation concern undermines the regimes'
ability to impede proliferation. In addition, the United States faces
limitations in applying national export controls. First, the U.S.
government finds it difficult to identify and track widely available
dual-use items that are not on control lists but that can be used for
cruise missile and UAV proliferation purposes. Second, a gap in U.S.
export control authority enabled American companies to legally export
dual-use items to a New Zealand resident who bought the items to show
how a terrorist could legally build a cruise missile. The gap results
from current catch-all[Footnote 2] regulations that restrict the sale
of unlisted dual-use items to certain national missile proliferation
projects or countries of concern, but not to nonstate actors such as
certain terrorist organizations or individuals.
The U.S. government applies conditions to exports of cruise missile and
UAV technology to specify how items can be used and by whom, but
performs little end-use monitoring to verify that exporters and foreign
recipients comply with conditions.[Footnote 3] The U.S. government uses
post-shipment verification visits to confirm that the recipients of
sensitive U.S. technologies are using them in accordance with license
conditions. However, State's verification is limited to confirming that
the item is delivered to its designated destination and does not
confirm other export license conditions. Of 786 licenses for cruise
missile and UAV technology that State issued between fiscal years 1998
and 2002, State conducted verification visits on only four licenses and
reported unfavorable results for three. Defense conducted no monitoring
over more than 500 cruise missiles that it transferred to other
countries between fiscal years 1998 and 2002. However, Defense's
program director stated that Defense may conduct more frequent
monitoring of cruise missiles and UAVs in the future. Finally, Commerce
conducted verification visits on 1 percent of nearly 2,500 missile-
related licenses issued between fiscal years 1998 to 2002. Similarly,
other supplier countries place conditions on cruise missile and UAV-
related transfers, but few reported conducting end-use monitoring once
they exported the items.
We are recommending that the Secretary of Commerce assess and report to
the Committee on Government Reform on the adequacy of the export
control regulations' catch-all provision to address missile
proliferation by nonstate actors and on ways the provision might be
modified. We are also recommending that the Secretaries of State,
Commerce, and Defense each complete a comprehensive assessment of the
nature and extent of compliance with license conditions on cruise
missiles, UAVs, and related dual-use technology. As part of the
assessment, the departments should also conduct additional PSV visits
on a sample of cruise missile and UAV licenses. This assessment would
allow the departments to gain critical information that would allow
them to better balance potential proliferation risks of various
technologies with available resources for conducting future PSV visits.
Commerce did not agree that the limited scope of the current catch-all
provision should be called a gap in U.S. regulations and noted that our
draft report was ambiguous as to whether the gap relates to items
listed on the control list or to items that are not listed because they
are not considered as sensitive for missile proliferation reasons.
Commerce agreed to review whether the existing catch-all provision
sufficiently protects U.S. national security interests. Our references
to the gap in the regulations refer to dual-use items that are not
listed on the Commerce Control List, and we have made changes to the
draft to clarify this point. We also modified our recommendation to
specify the need to include nonstate actors among the entities
considered under the Department's assessment of its catch-all
provisions. State said that our report was inaccurate in suggesting
that State does not monitor exports to verify compliance with export
authorizations and noted that we did not discuss the importance of pre-
license checks to verify end use and end user restrictions. We added
pre-license check information to the report and found that State
conducted such checks for only 6 of the 786 licenses for cruise missile
and UAV-related items that State issued between fiscal years 1998 and
2002.
DOD generally agreed with our findings and recommendations but
suggested that a sample would yield the same results as a comprehensive
assessment. Similarly, Commerce said that it has limited resources for
compliance monitoring and wants greater precision on the scope of
transactions that may need increased scrutiny. We modified the
recommendation to allow for sampling techniques when conducting the
assessment and to recognize that critical information from this
assessment would help the departments better balance potential
proliferation risks of various exported technologies with available
resources for conducting future post-shipment visits. State disagreed
with the recommendation to conduct a comprehensive assessment.
Nonetheless, State said that in conjunction with steps taken to improve
the targeting of Blue Lantern checks and increase the number conducted
annually, it would pay special attention to the need for additional
pre-and post-shipment checks for cruise missile-and UAV-related
technologies.
Background:
Distinctions between cruise missiles and UAVs are becoming blurred as
the militaries of many nations, in particular the United States, add
missiles to traditional reconnaissance UAVs and develop UAVs dedicated
to combat missions. A cruise missile consists of four major components:
a propulsion system, a guidance and control system, an airframe, and a
payload. The technology for the engine, the autopilot, and the airframe
could be similar for both cruise missiles and UAVs, according to a 2000
U.S. government study of cruise missiles. Figure 1 shows the major
components of a cruise missile.
Figure 1: Diagram of a Cruise Missile:
[See PDF for image]
[End of figure]
Cruise missiles provide a number of military capabilities. For example,
they present significant challenges for air and missile defenses.
Cruise missiles can fly at low altitudes to stay below radar and, in
some cases, hide behind terrain features. Newer missiles are
incorporating stealth features to make them less visible to radars and
infrared detectors. Modern cruise missiles can also be programmed to
approach and attack a target in the most efficient manner. For example,
multiple missiles can attack instantaneously from different directions.
Furthermore, land attack cruise missiles may fly circuitous routes to
get to their targets, thereby avoiding radar and air defense
installations.
UAVs are available in a variety of sizes and shapes, propeller-driven
or jet propelled, and can be straight-wing aircraft or have tilt-rotors
like helicopters. They can be as small as a model aircraft or as large
as a U-2 manned reconnaissance aircraft (see fig. 2).
Figure 2: Examples of UAVs:
[See PDF for image]
[End of figure]
U.S. policy on the proliferation of cruise missiles and UAVs is
expressed in U.S. commitments to the MTCR and Wassenaar Arrangement.
These multilateral export control regimes[Footnote 4] are voluntary,
nonbinding arrangements among like-minded supplier countries that aim
to restrict trade in sensitive technologies. Regime members agree to
restrict such trade through their national laws and regulations, which
set up systems to license the exports of sensitive items. The four
principal regimes are the MTCR; the Wassenaar Arrangement, which
focuses on trade in conventional weapons and related items with both
civilian and military (dual-use) applications; the Australia Group,
which focuses on chemical and biological technologies; and the Nuclear
Suppliers Group, which focuses on nuclear technologies. The United
States is a member of all four regimes. Regime members conduct a number
of activities in support of the regimes, including (1) sharing
information about each others' export licensing decisions, including
certain export denials and, in some cases, approvals and (2) adopting
common export control practices and control lists of sensitive
equipment and technology into national laws or regulations.
Exports of commercially supplied American-made cruise missiles,
military UAVs, and related technology are transferred pursuant to the
Arms Export Control Act, as amended,[Footnote 5] and the International
Trafficking in Arms Regulations,[Footnote 6] implemented by State.
Government-to-government transfers are made pursuant to the Foreign
Assistance Act of 1961, as amended,[Footnote 7] and subject to DOD
guidance. Exports of dual-use technologies related to cruise missiles
and UAVs[Footnote 8] are transferred pursuant to the Export
Administration Act of 1979, as amended,[Footnote 9] and the Export
Administration Regulations,[Footnote 10] implemented by Commerce.
Bureaus in two U.S. agencies are responsible for the initial
enforcement of export control laws. The Bureau of Immigration and
Customs Enforcement (ICE) in the Department of Homeland Security
conducts investigations enforcing the Arms Export Control Act, which is
administered by the State Department. ICE combines the enforcement and
investigative arms of the Customs Service, the investigative and
enforcement functions of the former Immigration and Naturalization
Service, and the Federal Protective Service as part of the Department
of Homeland Security. ICE shares responsibility with Commerce's Bureau
of Industry and Security for enforcing the Export Administration Act.
ICE and the Bureau of Industry and Security use enforcement tools such
as investigations of purported violations of law and regulation and
interdictions[Footnote 11] of suspected illicit shipments of goods.
Investigations can result in criminal prosecutions, fines, or
imprisonment or in export denial orders, which bar a party from
exporting any U.S. items for a specified period of time.
The Arms Export Control Act, as amended in 1996, requires the President
to establish a program for end-use monitoring of defense articles and
services sold or exported under the provisions of the act and the
Foreign Assistance Act.[Footnote 12] This requirement states that, to
the extent practicable, end-use monitoring programs should provide
reasonable assurance that recipients comply with the requirements
imposed by the U.S. government on the use, transfer, and security of
defense articles and services. In addition, monitoring programs, to the
extent practicable, are to provide assurances that defense articles and
services are used for the purposes for which they are provided. The
President delegated this authority to the Secretaries of State and
Defense.
Proliferation of Cruise Missiles and UAVs Poses a Growing Threat to
U.S. National Security Interests:
The proliferation of cruise missiles and UAVs poses a growing threat to
U.S. national security. Both can be used to attack U.S. naval
interests, the U.S. homeland, and forces deployed overseas. Cruise
missiles and UAVs have significant military capabilities, including
surveillance and attack, which the United States has demonstrated
during military engagements in Afghanistan and Iraq. In addition, U.S.
government projections show that the numbers of producers and exporters
of cruise missiles and UAVs will increase and that more countries of
concern will possess and begin to export them. The growing availability
of these weapons, and of related components and technology that are not
readily controllable, makes it easier for countries of concern and
terrorists to acquire or build at least rudimentary cruise missile or
UAV systems.
Military Capabilities of Cruise Missiles and UAVs Threaten U.S.
Interests:
Although cruise missiles and UAVs provide important capabilities for
the United States and its friends and allies, in the hands of U.S.
adversaries they pose substantial threats to U.S. interests. First,
anti-ship cruise missiles threaten U.S. naval forces deployed globally.
Second, land-attack cruise missiles have a potential in the long-term
to threaten the continental United States and U.S. forces deployed
overseas. Finally, UAVs represent an inexpensive means of launching
chemical and biological attacks against the United States and allied
forces and territory.
Cruise missiles pose a current and increasing threat to U.S. naval
vessels. For example, there are more than 100 existing and projected
missile varieties (including sub-and supersonic, high and low altitude,
and sea-skimming models) with ranges up to about 185 miles or more. We
reported in 2000 that the next generation of anti-ship cruise missiles-
-most of which are now expected to be fielded by 2007--will be equipped
with advanced target seekers and stealthy design.[Footnote 13] These
features will make them even more difficult to detect and defeat.
Land-attack cruise missiles pose a long-term threat to the U.S.
homeland and U.S. forces deployed overseas. Because land attack cruise
missiles suitable for long-range missions require sophisticated
guidance and complicated support infrastructures, they have
historically been found almost exclusively in superpower arsenals.
According to an unclassified summary of a national intelligence
estimate[Footnote 14] from December 2001, several countries are
technically capable of developing a missile launch mechanism to station
on forward-based ships or other platforms so that they can launch land-
attack cruise missiles against the United States. Technically, cruise
missiles can be launched from fighter, bomber, or even commercial
transport aircraft outside U.S. airspace. According to the National Air
Intelligence Center, defending against land attack cruise missiles will
strain air defense systems. Moreover, cruise missiles are capable of
breaking through U.S. defenses and inflicting significant damage and
casualties on U.S. forces, according to the Institute for Foreign
Policy Analysis' October 2000 study.
UAVs pose a longer-term threat as accurate and inexpensive delivery
systems for chemical and biological weapons and are increasingly sought
by nonstate actors, according to U.S. government and other
nonproliferation experts. For example, the U.S. government reported its
concern over this threat in various meetings and studies. The Acting
Deputy Assistant Secretary of State for Nonproliferation testified in
June 2002 that UAVs are potential delivery systems for WMD, and are
ideally suited for the delivery of chemical and biological weapons
given their ability to disseminate aerosols in appropriate locations at
appropriate altitudes. He added that, although the primary concern has
been that nation-states would use UAVs to launch WMD attacks, there is
potential for terrorist groups to produce or acquire small UAVs and use
them for chemical or biological weapons delivery.
Cruise Missiles and UAVs Continue to Proliferate:
At least 70 nations possess some type of cruise missile, mostly short-
range, anti-ship missiles armed with conventional, high-explosive
warheads, according to a U.S. government study. Estimates of the total
number of cruise missiles place the world inventory at a minimum of
75,000. Countries that export cruise missiles currently include China,
France, Germany, Israel, Italy, Norway, Russia, Sweden, United Kingdom,
and the United States. Nations that manufacture but do not yet export
cruise missiles currently include Brazil, India, Iran, Iraq, North
Korea, South Africa, and Taiwan. None of these nonexporting
manufacturing countries is a member of the Wassenaar Arrangement, and
only Brazil and South Africa are in the MTCR.[Footnote 15] The number
of cruise missile exporters is expected to grow with producers such as
India and Taiwan making their missiles available for export.
Currently, at least 12 countries are believed to be developing land-
attack cruise missiles; some of these new systems will be exported.
France, for example, signed a deal with the United Arab Emirates (UAE)
to export a type of cruise missile. By 2005, six countries of concern
will have acquired land-attack capabilities, up from only three in
2000, according to the National Air Intelligence Center.[Footnote 16]
Furthermore, cruise missile inventories are projected to increase
through 2015 and one to two dozen countries probably will possess a
land-attack cruise missile capability by this date, according to an
unclassified National Intelligence Estimate. While both land-attack and
anti-ship cruise missile inventories are projected to increase, land-
attack cruise missile inventories are expected to experience a
significantly higher percentage of growth.[Footnote 17]
According to defense industry sources, interest has picked up
dramatically from countries all over the world for acquiring and
developing even the simplest UAV technology and is expected to
continue, further diffusing this technology. Forty-one countries
operate about 80 types of UAV, primarily for reconnaissance. Currently,
some 32 nations are developing or manufacturing 250 models of UAVs.
Several countries involved in key aspects of the UAV industry are not
members of the MTCR. For example, 13 non-MTCR countries develop and
manufacture UAVs.[Footnote 18] Countries that pose a threat of WMD
proliferation concern, such as China, Russia, and Pakistan, are among
the 32 countries developing and expected to export UAVs.
Cruise Missile and UAV Proliferation Is Facilitated by the Ease of
Acquiring Systems and Technologies:
Cruise missiles and UAVs can be acquired in several ways, including
purchase of complete systems and conversion of existing systems into
more capable weapons. Acquisition of commercially available dual-use
technologies has made development of new systems and conversion of
existing systems more feasible.
Purchasing complete missile systems provides the immediate capability
of fielding a proven weapon. Complete cruise missiles can be acquired
from a variety of sources. For example, China and Russia have sold
cruise missiles to Iran, Iraq, Libya, North Korea, and Syria. In
addition, France has widely exported the Exocet, now in service in more
than 29 countries. Israel, Italy, Norway, Sweden, the United Kingdom,
and the United States have also exported anti-ship cruise missiles.
Various government and academic studies have raised concerns that the
wide availability of commercial items, such as global positioning
system receivers and lightweight engines, allows both countries and
nonstate actors to enhance the accuracy of their systems, upgrade to
greater range or payload capabilities, and convert certain anti-ship
cruise missiles into land-attack cruise missiles.[Footnote 19] Thus,
less capable and expensive systems could be more easily improved to
attack targets not currently accessible, especially on land. Although
not all cruise missiles can be modified into land-attack cruise
missiles because of technical barriers, specific cruise missiles can
and have been. For example, a 1999 study outlined how the Chinese
Silkworm anti-ship cruise missile had been converted into a land-attack
cruise missile.[Footnote 20] Furthermore, the Iraq Survey Group
reported in October 2003 that it had discovered 10 Silkworm anti-ship
cruise missiles modified to become land-attack cruise missiles and that
Iraq had fired 2 of these missiles at Kuwait.
Many issues concerning modification of cruise missiles also apply to
UAVs, according to one industry group. Larger UAVs are more adaptable
to change. Although several experts said that it is more expensive and
difficult to modify an existing aircraft into a UAV than to develop one
from scratch, some countries, such as Iraq, developed programs to
convert manned aircraft into UAVs. Some experts also expressed concerns
over adding autopilots to small aircraft to turn them into unmanned
UAVs that could deliver chemical or biological weapons.
Key Nonproliferation Tools Have Limitations Addressing Cruise Missile
and UAV Proliferation:
The U.S. government generally uses two key nonproliferation tools--
multilateral export control regimes and national export controls--to
address cruise missile and UAV proliferation, but both tools have
limitations. The United States and other governments have traditionally
used multilateral export control regimes, principally the MTCR, to
address missile proliferation. However, despite successes in
strengthening controls, the growing capability of countries of concern
to develop and trade technologies used for WMD limits the regime's
ability to impede proliferation. The U.S. government uses its national
export control authorities to address missile proliferation but finds
it difficult to identify and track commercially available items not
covered by control lists. Moreover, a gap in U.S. export control
regulations could allow subnational actors to acquire American cruise
missile or UAV technology for missile proliferation or terrorist
purposes without violating U.S. export control laws or regulations. The
United States has other nonproliferation tools to address cruise
missile and UAV proliferation--diplomacy, sanctions, and interdiction
of illicit shipments of items--but these tools have had unclear results
or have been little used.
Multilateral Export Control Regimes Increased Focus on Cruise Missiles
and UAVs, but Are Limited in Their Effectiveness:
The United States and other governments have used the MTCR, and, to
some extent, the Wassenaar Arrangement, as the key tools to address the
proliferation of cruise missiles and UAVs. While the United States has
had some success in urging these regimes to focus on cruise missiles
and UAVs, new suppliers who do not share regime goals limit the
regimes' ability to impede proliferation. In addition, there has been
less consensus among members to restrict cruise missiles and UAVs than
to restrict ballistic missiles.
The MTCR is principally concerned with controlling the proliferation of
missiles with a range of 300 kilometers and a payload of 500 kilograms
or with any payload capable of delivering chemical or biological
warheads. MTCR members seek to restrict exports of sensitive
technologies by periodically reviewing and revising a commonly accepted
list of controlled items, such as lightweight turbojet and turbofan
engines, or materials and devices for stealth technology usable in
missiles. The Wassenaar Arrangement seeks to limit transfers of
conventional arms and dual-use goods and technologies that could
contribute to regional conflict. Military UAVs below MTCR capability
levels of 300 kilometers range and 500 kilograms payload are included
on the Wassenaar Munitions List. DOD officials noted that MTCR attempts
to impede the proliferation of UAVs capable of delivering WMD, while
Wassenaar covers conventional weapons and items with a military
function.
In recent years, the increased awareness of the threat of chemical and
biological weapons and terrorists has increased members' interest in
cruise missile and UAV controls, according to State. MTCR control lists
were revised between 1997 and 2002 to adopt six of eight U.S. proposals
to include additional items related to cruise and UAV technologies.
Members agreed in 2002 to adopt (1) expanded controls on small, fuel-
efficient gas turbine engines, (2) a new control on integrated
navigation systems, and (3) a new control on UAVs designed or modified
for aerosol dispensing.[Footnote 21] At the September 2003 MTCR Annual
Plenary, members agreed to add to the control list complete UAVs
designed or modified to deliver aerosol payloads greater than 20
liters. In the Wassenaar Arrangement, the United States and other
members during 2003 made several proposals for new controls related to
UAVs and short-range cruise missiles and their payloads. Once changes
are officially accepted, MTCR and Wassenaar members are expected to
incorporate the changed control lists into their own national export
control laws and regulations. While including an item on a control list
does not preclude its export, members are expected to more carefully
scrutinize listed items pending decisions on their export. They are
also expected to notify other members when denying certain export
licenses for listed items.
Despite the efforts of these regimes, nonmembers such as China and
Israel continue to acquire, develop, and export cruise missile or UAV
technology. The growing capability of nonmember supplier countries to
develop technologies used for WMD and trade them with other countries
of proliferation concern undermines the regimes' ability to impede
proliferation. For example, China has sold anti-ship cruise missiles to
Iran and Iraq (see fig. 3). Israel also reportedly sold the Harpy UAV
to India, according to a Director of Central Intelligence report in
2003.[Footnote 22]
Figure 3: Chinese SILKWORM Cruise Missile in Iraq:
[See PDF for image]
[End of figure]
In addition to the limitations posed by non-member suppliers, some
nonproliferation experts and foreign government officials noted that
MTCR's effectiveness has been limited because there has been less
consensus among MTCR and Wassenaar members to restrict cruise missiles
and UAVs than to restrict ballistic missiles. MTCR members have not
always agreed with each others' interpretation of the MTCR guidelines
and control lists concerning cruise missiles. Specifically, members
have had different views on how to measure the range and payload of
cruise missiles and UAVs, making it difficult to determine when a
system has the technical characteristics that require more stringent
export controls to apply under MTCR guidelines. For example, cruise
missiles can take advantage of more fuel-efficient flight at higher
altitudes to gain substantially longer ranges than manufacturers and
exporting countries advertise. Even with the new definition of range
that the MTCR adopted in 2002, different interpretations remain among
members over whether particular cruise missiles could be modified to
achieve greater range. In one case, the United States and France
disagreed about France's proposed sale of its Black Shaheen cruise
missile to the United Arab Emirates, according to French and U.S.
government officials and nonproliferation experts (see fig. 4). In a
second case, members have raised questions about Russia's assistance to
India, a nonmember, to develop the Brahmos cruise missile project and
called for further discussion of the system's technical capabilities.
Figure 4: Black Shaheen Cruise Missile:
[See PDF for image]
[End of figure]
In October 2002, we reported on other limitations that impede the
ability of the multilateral export control regimes, including MTCR and
the Wassenaar Arrangement, to achieve their nonproliferation goals. For
example, we found that MTCR members may not share complete and timely
information, such as members' denied export licenses, in part because
the regime lacks an electronic data system to send and retrieve such
information. The Wassenaar Arrangement members share export license
approval information but collect and aggregate it to a degree that it
cannot be used constructively. Both MTCR and the Wassenaar Arrangement
use a consensus process that makes decision-making difficult and lack a
means to enforce compliance with members' political commitments to
regime principles. We recommended that the Secretary of State establish
a strategy to work with other regime members to enhance the
effectiveness of the regimes by implementing a number of steps,
including (1) adopting an automated information-sharing system in MTCR
to facilitate more timely information exchanges, (2) sharing greater
and more detailed information on approved exports of sensitive
transfers to nonmember countries, (3) assessing alternative processes
for reaching decisions, and (4) evaluating means for encouraging
greater adherence to regime commitments.[Footnote 23]
U.S. Government Authorities Have Had Difficulty Restricting Dual-use
Missile Technology Exports:
U.S. ICE and Commerce authorities have had difficulty identifying and
tracking dual-use exports in transit that could be useful for cruise
missiles and UAV development because such exports have legitimate
civilian uses. As a result, U.S. enforcement tools have been limited in
conducting investigations of suspected exports of illicit cruise
missile and UAV dual-use items. Moreover, a gap in U.S. export control
regulations could allow missile proliferators to acquire unlisted
American cruise missile or UAV dual-use technology without violating
the regulations.[Footnote 24]
Investigations Challenged by Nature of Cruise Missile and UAV Dual-use
Technology and Regulatory Limitations:
ICE officials said that it is difficult to conduct Customs enforcement
investigations of possible export violations concerning certain cruise
missile or UAV dual-use technologies. First, parts or components that
are not on control lists are often similar to controlled parts or
components, enabling exporters to circumvent the controls entirely,
according to ICE officials. Because ICE inspectors are not engineers
and shipping documents do not indicate the end product for the
component being shipped, determining what the components can do is
problematic. Second, countries seek smaller UAVs than those controlled.
ICE officials said that buyers who cannot get advanced UAVs instead try
to obtain model airplanes and model airplane parts, which might
substitute for UAVs and their components. Third, ICE officials noted
that circumventing the export control law is easy because the U.S.
government has to prove both the exporter's knowledge of the law and
the intent to violate it.[Footnote 25] As of October 2003, Customs had
completed two investigations related to UAVs, and had nine others open,
as well as one open case related to cruise missiles. The two cases
related to UAVs, both involving suspected diversions of items to
Pakistan, resulted in one finding of no violation and one guilty plea.
As a result, two defendants received prison terms of 24 and 30 months,
respectively, with 2 years of supervised release.
Commerce officials also indicated that there are challenges to
enforcing export controls on dual-use goods related to cruise missile
or UAV development. They stated that some investigations were not
pursued because the technical parameters of the items exported were
below the export control thresholds for missile technology.
Nonetheless, Commerce officials noted that exported items below these
parameters could be changed after export by adding components to
improve the technology. For example, software exported without a
license could receive an upgrade card that would make it an MTCR-
controlled item. As of October 2003, Commerce had completed 116
investigations related to missile proliferation, but not specifically
to cruise missiles or UAVs.[Footnote 26] Furthermore, the Secretary of
Commerce in 2003[Footnote 27] identified other challenges for the
enforcement of controls on dual-use goods related to missile
development. First, it is difficult to detect and investigate cases
under the "knowledge" standard[Footnote 28] set by the "catch-all"
provision.[Footnote 29] Second, some countries do not yet have catch-
all laws or have different standards for catch-all, which complicates
law enforcement cooperation. Third, identifying illegal exports and re-
exports of missile-related goods requires significant resources.
Nonetheless, the Secretary stated that United States has the ability to
effectively enforce end-use and end-user controls on missile technology
and that multilateral controls provide a strong framework for
cooperative enforcement efforts overseas.
Gap in U.S. Export Controls Could Allow Proliferators to Gain U.S.
Dual-use Technology for Cruise Missile or UAV Purposes:
A gap in U.S. export control regulations could allow missile
proliferators or terrorists to acquire U.S. cruise missile or UAV dual-
use technology without violating U.S. export control laws or
regulations. The Export Administration Regulations (EAR) establish
license requirements for items not listed in the regulations on the
Commerce Control List, as well as for items that are listed.[Footnote
30] License requirements for items not listed are based on the
exporter's knowledge of the end user or end uses to which the item
would be applied. For missile controls, an exporter may not export or
re-export an item if the exporter knows that the item (1) is destined
to or for a missile project listed in the regulations[Footnote 31] or
(2) will be used in the design, development, production or use of
missiles in or by a country listed in the regulations, whether or not
that use involves a listed project.[Footnote 32] However, this
condition on exports does not apply to activities that are unrelated to
the 12 projects or 20 countries listed in the regulation. This section
of the regulations was intended to apply to national missile
proliferation programs, according to Commerce officials, and not to
nonstate actors such as certain terrorist organizations or
individuals.[Footnote 33] Finally, this section of the regulations does
not apply to exports of dual-use items for missiles with less than 300
kilometers range and 500 kilograms payload because the regulatory
definition of a missile excludes missiles below MTCR range and payload
thresholds. However, such missiles with lesser range or payload could
be sufficient for terrorist purposes.
The case of a New Zealand citizen obtaining unlisted dual-use items to
develop a cruise missile illustrates this gap in U.S. export controls.
In June 2003 this individual reported that he purchased American
components necessary to construct a cruise missile to illustrate how a
terrorist could do so. Because the New Zealand citizen is not on a list
of prohibited missile projects, terrorist countries, or terrorists,
there is no specific export control requirement that an American
exporter apply to the U.S. government for a review of the items before
export, according to Commerce officials. According to Commerce
licensing and enforcement officials, they have no legal recourse in
this or similar cases, as there is no violation of U.S. export control
law or regulations. The Commerce officials said that they would need to
wait until the New Zealander used the weapon improperly before action
under export control law or regulations could be taken. It would be the
New Zealand government's responsibility to address any illicit action
resulting from such transfers of U.S. items, according to other
Commerce officials. One department official stated that not all export
control loopholes can be closed and that U.S. export controls cannot
fix defects in other countries' laws. Another Commerce official
explained that current catch-all controls assume that terrorists would
not attempt to acquire illicit arms in friendly countries, such as NATO
allies.
Commerce officials explained that proliferators seeking a rudimentary,
rather than state-of-the-art cruise missile, would be able to construct
such a weapon of components not listed on the Commerce Control List.
For these items, Commerce must directly link the items to a WMD program
to apply the catch-all controls; otherwise, no action can be taken,
according to the officials. They remarked that catch-all controls were
added to give licensing officers more flexibility in reviewing items.
However, exporters adept in covering up direct links to a WMD program
could continue to divert dual-use missile-related items, according to
the Commerce officials.
Other Nonproliferation Tools Had Unclear Results or Were Little Used:
The United States has other nonproliferation tools to address cruise
missile and UAV proliferation: diplomacy, sanctions, and interdiction
of illicit shipments of items. The United States used diplomacy to
address suspected cases of proliferation of cruise missiles and UAVs in
at least 14 cases.[Footnote 34] U.S. efforts to forestall transfers of
items succeeded in about one-third of these cases. The United States
issued diplomatic action in at least 14 cases to inform foreign
governments of proposed or actual transfers of cruise missile or UAV
items. The U.S. government successfully halted transfers in five cases,
did not successfully halt a transfer in two cases, did not know the
results of its actions or action was still in process in six cases, and
claimed partial success in one other case. Of nine cases involving MTCR
items, six of the nine countries demarched were MTCR members and three
were not.
Under several U.S. laws that authorize the use of sanctions when the
U.S. government determines that missile proliferation has occurred, the
U.S. government used sanctions twice between 1996 and 2002 for
violations related to exports of cruise missiles. In these two cases,
the United States sanctioned a total of 18 entities in 5 countries.
However, a State official did not know whether the entities ceased
their proliferation activities as a result.
Although the Acting Deputy Assistant Secretary of State for
Nonproliferation identified interdiction as one tool used to address
proliferation of cruise missile and UAV technology, U.S. and foreign
government officials knew of few cases of governments' interdicting
such shipments. To date, the United States reported using interdiction
once to stop illicit shipments of cruise missile or UAV technology. ICE
officials referred to only one case of an interdiction of a propeller
for a Predator UAV destined for Afghanistan. Commerce officials knew of
no cases where Commerce had been involved in interdiction of cruise
missile or UAV dual-use technology. Foreign governments reported no
known cases of interdiction of suspect cruise missile or UAV technology
exports.
The U.S. government announced discussions in June 2003 with 11 foreign
governments to increase the use of interdiction against all forms of
WMD and missile proliferation. A meeting in Paris of these governments
participating in the Proliferation Security Initiative announced a
statement of interdiction principles on September 4, 2003.[Footnote 35]
These principles include a commitment to:
* undertake effective measures for interdicting the transfer or
transport of WMD, delivery systems, and related materials to and from
states and nonstate actors of proliferation concern;
* adopt streamlined procedures for rapid exchange of relevant
information concerning suspected proliferation activity; and:
* review and work to strengthen relevant national legal authorities and
international law and frameworks to accomplish these objectives.
Compliance with Conditions on Exports of Cruise Missiles, UAVs, and
Related Dual-use Items Seldom Verified through End-use Monitoring:
Post-shipment verification (PSV) is a key end-use monitoring tool used
by U.S. agencies to confirm that authorized recipients of U.S.
technology both received transferred items and used them in accordance
with conditions of the transfer. However, State and Commerce seldom
conduct PSVs of transferred cruise missiles, UAVs, and related items;
State's program does not monitor compliance with conditions when checks
are made. Furthermore, Defense officials were not aware of any end-use
monitoring for more than 500 cruise missiles transferred through
government-to-government channels, although officials are considering
conducting such checks in the future. Similarly, other supplier
countries place conditions on transfers, but few reported conducting
end-use monitoring once items were exported.
State Did Not Assess Compliance and Infrequently Monitored Cruise
Missile and UAV Exports:
The Arms Control Export Act, as amended in 1996,[Footnote 36] requires,
to the extent practicable, that end-use monitoring programs provide
reasonable assurance that recipients comply with the requirements
imposed by the U.S. government in the use, transfer, and security of
defense articles and services. In addition, monitoring programs are to
provide assurances that defense articles and services are used for the
purposes for which they are provided. Accordingly, under State's
monitoring effort, known as the Blue Lantern program, State conducts
end-use monitoring of direct commercial sales of defense articles and
services, including cruise missiles, UAVs, and related technology.
According to Blue Lantern program guidance, a PSV is the only means
available to verify compliance with license conditions once an item is
exported. Specifically, a PSV is used (1) to confirm whether licensed
defense goods or services exported from the United States actually have
been received by the party named on the license and (2) to determine
whether those goods have been or are being used in accordance with the
provisions of that license.
Despite these requirements, we found that State did not use PSVs to
assess compliance with cruise missile or UAV licenses having conditions
limiting how the item may be used. These licenses included items deemed
significant by State regulations.[Footnote 37] Based on State licensing
data, we identified 786 licenses for cruise missiles, UAVs, or related
items[Footnote 38] from fiscal years 1998 through 2002. Of these, 480
(61 percent) were licenses with conditions, while 306 (39 percent) were
licenses without conditions. These 786 licenses included one for a
complete state-of-the-art Predator B UAV (see fig. 5), and 27 for
supporting Predator technical data, defense services, and parts. The
licenses also included 7 for supporting technical data, defense
services, and parts for the highly advanced Global Hawk UAV.
Figure 5: Predator B UAV:
[See PDF for image]
[End of figure]
We found that State did not conduct PSVs for any of the 480 licenses
with conditions and conducted PSVs on only 4 of 306 licenses approved
without conditions. Each license reviewed through the post-shipment
checks involved transferred UAV-related components and equipment. Three
of the licenses receiving checks resulted in unfavorable determinations
because a company made inappropriate end-use declarations or the end
user could not confirm that it had received or ordered the items. State
added that it has many other sources of information besides PSV checks
on the misuse and diversion of exported articles. These sources include
intelligence reporting, law enforcement actions, embassy reporting, and
disclosures of U.S. companies.
A State licensing official stated that few post-shipment Blue Lantern
checks have been conducted for cruise missiles, UAVs, and related items
because many are destined for well-known end users in friendly
countries. However, over fiscal years 1998 through 2002, 129 of the 786
licenses authorized the transfer of cruise missile and UAV-related
items to countries such as Egypt, Israel, and India. These countries
are not MTCR members, which indicates that they might pose a higher
risk of diversion. In addition, over the last 4 years, State's annual
end-use monitoring reports to Congress[Footnote 39] recognized an
increase in the incidence of West European-based intermediaries
involved in suspicious transactions. State noted in its 2001 and 2002
reports that 23 and 26 percent, respectively, of unfavorable Blue
Lantern checks for all munitions items involved possible transshipments
through allied countries in Europe.
In contrast to State's guidance, State officials said that the Blue
Lantern program was never intended to verify license condition
provisions on the transfer of munitions such as cruise missile and UAV-
related items. Instead, State officials explained that the program
seeks to make certain only that licensed items are being used at the
proper destination and by the proper end user. A State official further
said that the compliance office is not staffed to assess compliance
with license conditions and has not been managed to accomplish such a
task.
In commenting on a draft of this report, State emphasized the
importance of Blue Lantern pre-license checks in verifying controls
over the end user and end use of exported items and said that we did
not include such checks in our analysis. We reviewed the 786 cruise
missile and UAV licenses to determine how many had received Blue
Lantern pre-license checks, a possible mitigating factor reducing the
need to conduct a PSV. We found that only 6 of the 786 licenses from
fiscal years 1998 through 2002 that State provided us had been selected
for pre-license checks. Of these, four received favorable results, one
received an unfavorable result, and one had no action taken.
Department of Defense Conducted Little Monitoring of Transferred Cruise
Missiles:
Under the Arms Control Export Act, as amended in 1996,[Footnote 40] the
Department of Defense also is required to monitor defense exports to
verify that foreign entities use and control U.S. items in accordance
with conditions. The amended law requires an end-use monitoring program
for defense articles and services transferred through the Foreign
Military Sales program. Monitoring programs, to the extent practicable,
are required to provide reasonable assurances that defense articles and
services are being used for the purposes for which they are provided.
The Defense Security Cooperation Agency (DSCA) is the principal
organization through which Defense carries out its security assistance
responsibilities, including administering the Foreign Military Sales
program. Under this program, the United States transfers complete
weapons systems, defense services, and related technology to eligible
foreign governments and international organizations from Defense stocks
or through Defense-managed contracts. Bilateral agreements contain the
terms and conditions of the sale and serve as the equivalent of an
export license issued by State or Commerce.
From fiscal years 1998 through 2002, DSCA approved 37 agreements for
the transfer of more than 500 cruise missiles and related items, as
well as one transfer of UAV training software. The agreements
authorized the transfer of Tomahawk land-attack cruise missiles,
Standoff land-attack missiles, and Harpoon anti-ship cruise missiles,
as well as supporting equipment such as launch tubes, training
missiles, and spare parts. Approximately 30 percent of cruise missile
transfers were destined for non-MTCR countries. Figure 6 shows the
destinations of transferred cruise missiles.
Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years
1998-2002:
[See PDF for image]
Note: Numbers may not total due to rounding.
[End of figure]
Defense's end-use monitoring program, called Golden Sentry, has
conducted no end-use checks related to cruise missile or UAV transfers,
according to the program director. DSCA guidance states that
government-to-government transfers of defense items, including cruise
missiles, are to receive routine end-use monitoring. Under routine
monitoring, Security Assistance Officers and/or military department
representatives account for the end use of defense articles through
personal observation in the course of other assigned duties. However,
the program director stated that he was unaware of any end-use
monitoring checks, routine or otherwise, for transferred U.S. cruise
missiles over the period of our review. In addition, a past GAO
report[Footnote 41] found problems with monitoring of defense items and
recommended that DSCA issue specific guidance to field personnel on
activities that need to be performed for the routine observation of
defense items. Nonetheless, Defense's Golden Sentry monitoring program
is not yet fully implemented, despite the 1996 legal requirement to
create such an end-use monitoring program. DSCA issued program guidance
in December 2002 that identified the specific responsibilities for new
end-use monitoring activities. In addition, as of November 2003, DSCA
was conducting visits to Foreign Military Sales recipient countries to
determine the level of monitoring needed and was identifying weapons
and technologies that may require more stringent end-use monitoring.
The program director stated that he is considering adding cruise
missiles and UAVs to a list of weapon systems that receive more
comprehensive monitoring.
Commerce Conducted Little Monitoring of Cruise Missile and UAV-related
Dual-use Exports:
The Export Administration Act, as amended, provides the Department of
Commerce with the authority to enforce dual-use controls. Under the
act, Commerce is authorized to conduct PSV visits outside the United
States of dual-use exports.[Footnote 42] The Export Administration
Regulations indicate that a transaction authorized under an export
license may be further limited by conditions that appear on the
license, including a condition that stipulates the need to conduct a
PSV.[Footnote 43] Commerce can conduct a PSV by applying a condition to
a license that requires U.S. mission staff residing in the recipient
country to conduct a PSV, or it can send a safeguards verification team
from Commerce headquarters to the country to conduct a PSV. Based on
Commerce licensing data, we found that Commerce issued 2,490 dual-use
licenses between fiscal years 1998 and 2002 for items that could be
useful in developing cruise missiles or UAVs.[Footnote 44] Of these,
Commerce selected 2 percent of the licenses, or 52 cases, for a PSV
visit and completed visits to 1 percent of the licenses. Specifically,
Commerce designated PSVs as a license condition for 28 licenses, and
completed 5. Commerce designated PSVs as part of a safeguards team for
24 cases, and completed all of them. Of these 24 checks, 23 resulted in
favorable determinations, while 1 was unfavorable.
Commerce guidance for selecting PSVs and pre-license checks establish
criteria based on technologies and countries that require a higher
priority for conducting PSVs and pre-license checks. The guidance
identifies 19 specific missile technology categories from the Commerce
Control List involving particularly sensitive commodities as choke
points for the development of missiles and indicating a priority for
PSV or pre-license selection. For example, items such as software and
source code to improve inertial navigation systems, as well as
lightweight turbojet and turbofan engines, are included as choke point
missile technologies. In addition, the guidance identifies 20 countries
of missile diversion concern that may also warrant a pre-license check
or PSV. The guidance further identifies 12 specific countries or
destinations that have been used repeatedly, and are likely to be used
again, as conduits for diversions of sensitive dual-use commodities or
technology.[Footnote 45] The guidance states that other factors might
mitigate the need to select a license for a PSV.
We applied Commerce's guidelines to the 2,490 cruise missile or UAV-
related licenses and identified 20 that met the criteria to receive a
PSV or a pre-license check. However, Commerce selected only 2 of these
20 licenses. All 20 licenses were for choke point missile technology
useful for cruise missile or UAV development. Some of these licenses
were for countries of missile diversion concern, such as India, while
others were for transshipment countries, such as Singapore. Figure 7
shows the destinations for items in the 20 licenses and the percentage
of licenses for each destination.
Figure 7: Destinations of Dual-use Approved Licenses for Chokepoint
Technologies, Fiscal Years 1998-2002, by Country:
[See PDF for image]
[End of figure]
We found that Commerce selected 2 of the 20 licenses for a PSV. One PSV
resulted in a favorable determination, while the other had not been
completed at the time of our review. Even though the 20 licenses met
guidance criteria, few of these licenses had been selected for PSVs. A
Commerce official explained that licenses might not be selected for a
PSV because many factors might mitigate the need for a PSV for a
particular license even though it meets the selection criteria.
However, Commerce officials could not explain which factors lessened
the need for a PSV for the remaining 18 licenses.
Few International Suppliers Verify End-use Controls:
Other supplier countries have established export control laws and
regulations, which also place conditions on transfers and can authorize
agencies to conduct end-use monitoring of sensitive items. For example,
government officials from the United Kingdom, France, and Italy stated
that their respective governments might add conditions for cruise
missile and UAV-related items, as well as for other exports. While
national export laws authorize end-use monitoring, none of the foreign
government officials reported any PSV visits for cruise missile or UAV-
related items.
The national export control systems of other cruise missile and UAV
supplier countries that responded to our request for information apply
controls differently from the United States for missile-related
transfers. Government officials in France, Italy, and the United
Kingdom stated that their respective governments generally do not
verify conditions on cruise missile and UAV transfers and conduct few
post-shipment verification visits of such exports. The South African
government was the only additional supplier country responding to a
written request for information[Footnote 46] that reported it regularly
requires and conducts PSVs on cruise missile and UAV transfers.
* Officials in the United Kingdom stated that the U.K. government seeks
to ensure compliance with license conditions, but it has no
institutional system for conducting PSVs for British exports. Although
defense attaches keep their eyes open for cases of misuse of an item,
the officials did not know whether any PSV visits had been done for
transfers of British cruise missiles or UAVs. A U.K. government
official said that occasionally embassy officials may conduct PSVs on
other British equipment. For example, a PSV may be undertaken to
confirm that British tanks are not being used by Israel to conduct
operations in Gaza. However, the official added that such actions are
neither required nor routine.
* Italian government officials stated that all armament transfers
include conditions that the end user cannot retransfer to other
countries or users without prior permission from the government.
Additionally, some export licenses require an import delivery
certificate as a condition to certify that an item has been imported.
For those licenses, the government of Italy allows firms fixed periods
of time to provide required documents. If the recipient does not send a
required delivery certificate, then a PSV would be conducted to verify
whether the end user received the items.
* According to French officials, France does not conduct explicit PSV
visits. Instead, its officials observe end-use conditions during
technical or military-to-military contacts. Specifically, French
officials stated that when missiles or any other highly technological
goods are sold contact between the government and the recipient
provides opportunities to ensure the disposition of the exported item.
* According to South African government officials, requirements for PSV
visits may be applied to licenses for cruise missile and UAV-related
technology. Furthermore, South Africa conducts regular end-use
verifications to selected end users of non-MTCR countries and may
initiate other ad hoc visits as required by the South African control
authorities. In addition, government-to-government agreements require
end-use certificates containing delivery verification information and
include authorizations for end-use verification visits, as well as non-
retransfer, non-modification, and non-reproduction clauses. South
African government officials also stated that each clause must be fully
verified and authenticated.
Conclusions:
The continued proliferation of cruise missiles and UAVs poses a growing
threat to the United States, its forces overseas, and its allies. Most
countries already possess cruise missiles, UAVs, or related technology,
and many are expected to develop or obtain more sophisticated systems
in the future. The dual-use nature of many of the components of cruise
missiles and UAVs also raises the prospect that terrorists could
develop rudimentary systems that could pose additional security threats
to the United States. Since this technology is already widely available
throughout the world, the United States works in concert with other
countries through multilateral export control regimes to better control
the sale of cruise missiles, UAVs, and related technologies. Even
though the effectiveness of these regimes is limited in what they can
accomplish, the United States could achieve additional success in this
area by adopting our previous recommendations to improve the regimes'
effectiveness.
U.S. export controls may not be sufficient to prevent cruise missile
and UAV proliferation and ensure compliance with license conditions.
Because some key dual-use components can be acquired without an export
license, it is difficult for the export control system to limit or even
track their use. Moreover, current U.S. export controls may not prevent
proliferation by nonstate actors, such as certain terrorists, who
operate in countries that are not currently restricted under missile
proliferation regulations. Furthermore, the U.S. government seldom uses
its end-use monitoring programs to verify compliance with the
conditions placed on items that could be used to develop cruise
missiles or UAVs. Thus, the U.S. government does not have sufficient
information to know whether recipients of these exports are effectively
safeguarding equipment and technology in ways that protect U.S.
national security and nonproliferation interests. The challenges to
U.S. nonproliferation efforts in this area, coupled with the absence of
end-use monitoring programs by several foreign governments for their
exports of cruise missiles or UAVs, raise questions about how
nonproliferation tools are keeping pace with the changing threat.
Recommendations for Executive Action:
A gap in dual-use export control regulations could enable individuals
in most countries of the world to legally obtain without any U.S.
government review U.S. dual-use items not on the Commerce Control List
to help make a cruise missile or UAV. Consequently, we recommend that
the Secretary of Commerce assess and report to the Committee on
Government Reform on the adequacy of the Export Administration
Regulations' catch-all provision to address missile proliferation by
nonstate actors. This assessment should indicate ways the provision
might be modified.
Because the departments have conducted so few PSV visits to monitor
compliance with U.S. government export conditions on transfers of
cruise missiles, UAVs and related dual-use technology, the extent of
the compliance problem is unknown. While we recognize that there is no
established or required number of PSV visits that should be completed,
the small number completed does not allow the United States to
determine the nature and extent of compliance with these conditions.
Thus, we recommend that the Secretaries of State, Commerce, and
Defense, as a first step, each complete a comprehensive assessment of
cruise missile, UAV, and related dual-use technology transfers to
determine whether U.S. exporters and foreign end users are complying
with the conditions on the transfers. As part of the assessment, the
departments should also conduct additional PSV visits on a sample of
cruise missile and UAV licenses. This assessment would allow the
departments to gain critical information that would allow them to
better balance potential proliferation risks of various technologies
with available resources for conducting future PSV visits.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Secretaries of Commerce,
Defense, and State for their review and comment. We received written
comments from Commerce, Defense, and State that are reprinted in
appendixes II, III, and IV. DOD and State also provided us with
technical comments, which we incorporated as appropriate.
Commerce did not agree that the limited scope of the current catch-all
provision should be called a gap in U.S. regulations but agreed to
review whether the existing catch-all provision sufficiently protects
U.S. national security interests. Commerce said that it believes that
the export control system effectively controls items of greatest
significance for cruise missiles and UAVs and are on the Commerce
Control List. It stated that our report is ambiguous as to whether the
gap relates to items listed on the control list or to items that are
not listed, as they are not considered as sensitive for missile
proliferation reasons. Commerce also stated that we should explain the
basis for suggesting that noncontrolled items are sensitive and should
be placed on the MTCR control list, if that is our position. Our
references to the gap in the regulations refer to dual-use items that
are not listed on the Commerce Control List and we have made changes to
the draft to clarify this point. Furthermore, we are not suggesting
that unlisted items should be added to the MTCR control list to deal
with the issue we identified in the New Zealand example. As we
recommend, the vehicle to address this gap would be an expansion of
Commerce's catch-all provision whereby license reviews would be
required when the exporter knows or has reason to know that the items
might be used by nonstate actors for missile proliferation purposes. In
commenting on our draft report's recommendation to require an export
license review for any item that an exporter knows or has reason to
know would be used to develop or design a cruise missile or UAV of any
range, Commerce agreed to review whether the existing provision
sufficiently protects U.S. national security interests. We have
modified our recommendation to reflect the need for an assessment of
the catch-all provision's scope and possible ways to modify the
provision to address the gap.
State disagreed with our findings and conclusions concerning its end-
use monitoring program. State said that our report was inaccurate in
suggesting that State does not monitor exports to verify compliance
with export authorizations and noted that we did not discuss the
importance of pre-license checks to verify end use and end user
restrictions. It said that our report was misleading and inaccurate to
suggest that State does not monitor exports to verify compliance with
export authorizations. State said that the most important restrictions
placed on export authorizations involve controls over the end user and
the end use of the article being exported. State also said that it uses
many tools in the export licensing process to verify these restrictions
and that the Blue Lantern program's pre-and post-license checks are
only one of these tools. State said that pre-license checks verify the
bond fides of end users, as well as the receipt and appropriate end use
of defense articles and services, including UAV-and missile-related
technologies. It also questioned why our analysis did not include pre-
license checks as part of State's efforts to ensure compliance with
arms export regulations.
We agree that pre-license checks are critical to ensure that licenses
are issued to legitimate, reliable entities and for specified programs
or end uses in accordance with national security and foreign policy
goals. We also agree that they augment controls and checks used during
the licensing process to determine the legitimacy of the parties
involved and the appropriate end use of the export prior to license
approval. However, such checks cannot confirm the appropriate end user
or end use of an item after it has been shipped and received by the
recipient. Regarding other tools in the export licensing process to
verify conditions, we asked State for additional information that would
indicate what other actions, besides PSV checks, State took. State
officials said that some license conditions required follow-up
action--such as forms or reports--either by State officials, exporters,
or end users. We asked for examples of such follow-up action related to
licenses for cruise missiles, UAVs, or related technology. A State
official said that, after querying the relevant licensing teams,
Statofficials did not identify any licenses requiring follow-up action
and that there is no system, formal or otherwise, that would document
follow-up actions that had been taken. In response to State's comments,
we added information on Blue Lantern pre-license checks to the report,
information that further demonstrates the limited monitoring that State
conducts on cruise missile and UAV-related transfers. We reviewed the
786 cruise missile and UAV licenses to determine how many had received
Blue Lantern pre-license checks, a possible mitigating factor reducing
the need to conduct a PSV. These included 129 licenses to non-MTCR
countries, such as Egypt, Israel, and India, which present a higher
risk of misuse or diversion. We found that only 6 of the 786 licenses
that State provided us had been selected for pre-license checks. Of
these, 4 received favorable results, 1 received an unfavorable result,
and 1 had no action taken.
Commerce and DOD partially agreed with our second recommendation to
complete a comprehensive assessment of cruise missile, UAV and related
dual-use technology transfers. However, both departments raised
concerns over the resources needed to conduct such a comprehensive
assessment and sought further definition of the scope of the transfers
to be assessed as the basis for interagency action and additional
resources for monitoring. DOD suggested that a random sample of cases
could achieve results equivalent to that of a comprehensive assessment.
It agreed to conduct a greater number of PSVs in order to (1) provide
the U.S. government with a high level of confidence over time that
exporters and end users are complying with export license conditions
and (2) allow the U.S. government to determine whether adequate
resources are devoted to license compliance issues. We clarified our
recommendation so that a comprehensive assessment could include a
sampling methodology so long as it provided each agency with a high
level of confidence that the sample selected accurately demonstrated
the nature and extent of compliance with conditions. State disagreed
with our recommendation and said that the absence of evidence in our
report of misuse or diversion does not warrant such an extensive
effort. Nonetheless, State said that in conjunction with steps taken to
improve the targeting of Blue Lantern checks and increase the number
conducted annually, it would pay special attention to the need for
additional pre-and post-shipment checks for cruise missile-and UAV-
related technologies. Since State conducted no PSV checks for any of
the 480 licenses for cruise missile or UAV-related licenses with
conditions that we reviewed and only 6 pre-license checks for the 786
licenses, the need for State to assess its monitoring over cruise
missile and UAV licenses is a recommendation we strongly reaffirm.
As arranged with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
after the date of this letter. At that time, we will send copies of
this report to appropriate congressional committees and to the
Secretaries of Commerce, Defense, and State. Copies will be made
available to others upon request. In addition, this report will be
available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-8979 or at christoffj@gao.gov. A GAO contact
and staff acknowledgments are listed in appendix V.
Sincerely yours,
Signed by:
Joseph A. Christoff:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To determine the nature and extent of cruise missile and UAV
proliferation, we reviewed documents and studies of the Departments of
Commerce, Defense, Homeland Security, and State, the intelligence
community, and nonproliferation and export controls specialists in
academia and the defense industry. These included the Unclassified
Report to Congress on the Acquisition of Technology Relating to Weapons
of Mass Destruction and Advanced Conventional Munitions, 1 January
through 30 June 2002; the Director of Central Intelligence worldwide
threat briefing on The Worldwide Threat in 2003: Evolving Dangers in a
Complex World 11 February 2003; and the DOD UAV Roadmap for 2000 to
2025 and 2002 to 2025. We also reviewed databases of the UAV Forum and
UVONLINE. Also, we reviewed plenary, working group, and information
exchange documents of the MTCR. We met with officials of the
Departments of Commerce, Defense, Homeland Security, and State, the
intelligence community, and with nonproliferation and export controls
specialists in academia in Washington, D.C., and officials of the
National Air Intelligence Center in Dayton, Ohio. We also met with
representatives of private companies Adroit Systems Inc., EDO, Boeing,
MBDA, Lockheed Martin, and with the industry associations National
Defense Industrial Association (NDIA) and the Aerospace Industries
Association in Washington, D.C. In addition, we received a written
response from NDIA to a list of detailed questions. Also, we met with
representatives of the Defense Manufacturing Association, SBAC,
Goodrich, BAE Systems, and MBDA in London, United Kingdom; and of the
European Unmanned Vehicle Systems Association (EURO UVS) in Paris,
France. In addition, we attended two conferences of the Association for
Unmanned Vehicle Systems International (AUVSI) in Washington, D.C., and
Baltimore, Maryland.
To examine how the U.S. and other governments have addressed
proliferation of cruise missile and UAV risks, we analyzed the
documents and studies noted above and met with officials and
representatives of the previously mentioned governments and
nonproliferation and export controls specialists in academia. We also
reviewed relevant documents and data to determine how the U.S. and
other governments have used export controls, diplomacy, interdiction,
and other policy tools. Based on this information, we conducted
analyses to determine how each tool had been employed and with what
results.
To evaluate the end-use controls used by the U.S. and other
governments, we obtained documents and met with officials from the
Departments of Commerce, Defense, and State. We also reviewed arms
transfer data from DOD and export licensing data from State and
Commerce databases to assess what cruise missile and UAV technology the
United States exported, how the U.S. government selected licenses to
receive post-shipment monitoring, and how it applied end-use post-
shipment controls. Moreover, we reviewed applicable U.S. export control
laws and regulations. We performed qualitative and quantitative
analyses of selected export licenses to determine the extent and
frequency of applied license conditions and end-use checks related to
cruise missile and UAV transfers. To determine the completeness and
accuracy of the Defense and State data sets, we reviewed related
documentation, interviewed knowledgeable agency officials, and
reviewed internal controls. The State database system is not designed
to identify all cruise missile or UAV commodities transferred.
Therefore, the team developed a list of search terms based on
consultations with State officials concerning which terms would likely
capture all transfers involving cruise missiles, UAVs, and related
technology. State provided the criteria we used to determine what
State-licensed exports were cruise missile or UAV-related. State
officials queried their licensing database to search for specific
category codes and 12 keywords.[Footnote 47] The resulting report that
State provided to us contained 400 pages with 1,300 entries. While we
have high confidence that our analysis allowed us to capture most of
the relevant cases, it is possible that a few relevant State cases
might have been missed. We also assessed the reliability of the
Commerce data by performing electronic testing of required data
elements and by interviewing agency officials knowledgeable about the
data. We determined that the data elements were sufficiently reliable
for the purposes of this engagement.
We also interviewed officials of the governments of France, Italy, and
the United Kingdom, and met with representatives of the point of
contact for the MTCR in Paris, France. In addition, we received written
responses to questions we provided to the governments of Israel, Japan,
South Africa, and Switzerland. Russia and Canada provided a response
too late to be included in this report. We requested the same
information from the government of Germany, but received no response.
Our ability to address two objectives was impaired by a Department of
State delay in assisting our efforts to collect responses to written
questions from foreign governments. State agreed to facilitate this
effort 4 months after our initial request for assistance and only after
we reduced the number of countries to receive our questions from 16 to
7 and reduced the number of questions. Given this delay, governments
had less time to respond to our questions than we had originally
planned. Thus, we could not fully assess how other governments address
the proliferation risks of cruise missiles, UAVs, and related
technology and apply end-use controls on their exports of these items.
We performed our work from October 2002 to November 2003 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Commerce:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
UNITED STATES DEPARTMENT OF COMMERCE
Under Secretary for Industry and Security
Washington, D.C. 20230:
November 14, 2003:
Mr. Joseph A. Christoff:
Director, International Affairs and Trade
General Accounting Office
Washington, D.C. 20548:
Dear Mr. Christoff:
I am writing with regard to your November 4, 2003 letter to Secretary
Evans forwarding the GAO's proposed report entitled Nonproliferation:
Improvements Needed to Better Control Technology Exports for Cruise
Missiles and Unmanned Aerial Vehicles (GAO-04-175) ("GAO Report"). The
Secretary has requested that we provide the Department's comments.
As an initial point, we would like to comment briefly on GAO's
description of the proliferation of cruise missiles and unmanned aerial
vehicles (UAVs) as posing a growing threat to U. S. national security
interests (pp. 11-16). The GAO has requested comments from the
Departments of State and Defense on its draft report, and we generally
defer to those Departments on this issue. We note, however, that the
extent of this threat varies significantly based on the type of cruise
missile or UAV that is at issue. In our view, there is an important
distinction, for instance, between the threats posed by a rudimentary
UAV that is radio-controlled and operates only in line of sight, versus
a cruise missile with a range of 1000 km and payload of 1000 kg. The
GAO report does not distinguish among the varying threats posed by
different types of cruise missiles and UAVs, and we suggest that it
would be more useful to policymakers if the report drew such
distinctions.
The Commerce Department's principal comments are organized in two
parts: (1) comments to ensure a complete and accurate understanding of
the facts relating to current U.S. export control policies as they
pertain to cruise missiles and UAVs, and (2) comments regarding the two
draft GAO recommendations.
I. Comments Regarding Current U.S. Export Control Policies:
The United States implements a vigorous export control program to
address the international problem of missile proliferation, both by
applying significant domestic export controls and by working to
strengthen the relevant international agreements.
A. Multilateral Activities:
The GAO first focuses on the relevant multilateral export control
regimes, i.e., the Missile Technology Control Regime (MTCR) and the
Wassenaar Arrangement, making several points (pp. 16-20). First, the
GAO argues that the emergence of non-member suppliers undermines the
regimes' ability to prevent proliferation. The Commerce Department
concurs, as members of the MTCR and the Wassenaar Arrangement do not
have a monopoly on most controlled cruise missile/UAV systems. This
fact poses a significant challenge for these regimes in this context
and more generally.
Second, the GAO suggests that there may be insufficient consensus among
MTCR members to restrict cruise missiles and UAVs. The GAO focuses on
two aspects of the MTCR's cruise missile /UAV policies - the
measurement of range and payload, and the addition of items
to the MTCR control list. Regarding the former, we agree that the
discrepancies in definitions of range and payload have had an impact on
control effectiveness in the past. However, as the GAO notes, the MTCR
adopted new definitions of range and payload in 2002, at U.S.
instigation. We believe that these definitions will play a useful role
in enabling the members to resolve technical questions that inevitably
arise.
Regarding the latter issue, as the GAO correctly points out (p. 17),
the MTCR has recently adopted numerous U.S. proposals to include
additional items on control lists. Most recently, at the September 2003
Plenary Session, agreement was finalized on the addition of complete
UAVs designed or modified to deliver aerosol payloads greater than 20
liters. This expansion of controls is specifically intended to address
the chemical and biological terrorist threat. Overall, we believe that
the MTCR and Wassenaar Arrangement generally do control dual-use items
of current significance for cruise missiles and UAVs that pose concerns
for U.S. national security. While various components of cruise missiles
or UAVs could be added to the control list, these items generally have
significant commercial uses as well, and it is important to take into
account the impact on the commercial marketplace as well as the extent
to which an MTCR or Wassenaar control would be effective.
Moreover, the report does not discuss that, at the September 2003 MTCR
Plenary Session, MTCR members agreed to include a "catch-all" provision
in the regime guidelines to address situations when an exporter has
knowledge that a non-listed item is intended to contribute to missile
proliferation, or when the national authority informs the exporter that
a license is required for the export of non-listed items that support
unmanned delivery systems. When properly implemented, this catch-all
provision could significantly strengthen MTCR disciplines and address
some of the concerns in the GAO report.
B. U.S. Export Controls:
The GAO then proceeds to discuss U.S. export controls relating to
cruise missiles and UAVs, specifically (1) the adequacy of enforcement
of these controls, and (2) whether there is a "gap" in U.S. export
control regulations.
1. Adequacy of enforcement of U.S. controls:
We generally defer to the Department of Homeland Security regarding
enforcement of these controls by Customs officials. However, we
question whether all of the statements cited necessarily support the
conclusion that it is "difficult to conduct Customs enforcement
investigations into possible export violations concerning cruise
missile or UAV dual-use technologies." (p. 20.) The fact that similar
parts or components are "not on control lists," and can be legally
exported, if this is correct, may indicate that it is appropriate to
revise the control list, depending on the particular facts. But this
fact would not demonstrate that it is difficult to enforce the controls
on items that are controlled. Similarly, the fact that "countries seek
smaller UAVs than those controlled," if this is correct, would not
support the conclusion quoted above, but would raise the separate issue
of whether it is appropriate to control "model airplanes and model
airplane parts."
The GAO discusses the "knowledge" standard for export control
violations (pp. 20-21). We disagree with the statement, attributed to
the Department of Homeland Security, that "the U.S. government has to
prove both the exporter's knowledge of the law and the intent to
violate it."
Civil penalties can be imposed for the export without a valid license
of items controlled for "missile technology" reasons, without any
showing of intent. Even under the "catch-all" provision in the Export
Administration Regulations (EAR), it is only necessary to show that an
exporter was "[aware] of a high probability" that an item was destined
for a missile proliferation activity - it is not necessary to show, in
a civil penalty case, "knowledge of the law" or "the intent to violate
it." The GAO also refers to Commerce's previous acknowledgment that it
is difficult to detect and investigate cases under the "knowledge"
standard set by the "catch-all" provision. The Department of Commerce
is taking steps to clarify exporters' obligations under the EAR catch-
all requirements.
The GAO correctly notes that in selecting PSVs and pre-license checks,
Commerce uses criteria based on technologies and countries. (p. 31.)
Commerce has an established protocol for conducting end-use checks that
describes a number of variables that are considered in determining
whether an end-use check should be initiated. These include information
about the parties to the transaction, the proposed end-use, the
ultimate destination, the previous licensing history of the parties,
and known enforcement concerns. Of the 19 or 20 licenses referenced in
the report (the report references 19 licenses in some parts of the
analysis and 20 licenses in others) to which GAO applied "Commerce
guidelines," it is unclear how GAO applied the established Commerce
protocol to reach its conclusions.
2. "Gap" in U.S. export control regulations:
The Commerce Department is concerned that there is ambiguity in the
GAO's draft report as to whether the alleged "gap" it identifies
relates to items listed on the Commerce Control List.
(We also question, as discussed in Section ILA below, whether it is
accurate to refer to the issue raised by the GAO as a "gap.") We
suggest that GAO clearly distinguish between items controlled for
"missile technology" reasons on the Commerce Control List, and items
that are not listed (because they are not considered as sensitive for
missile proliferation reasons). In particular, on page 5, the GAO
expresses concern that U.S. law does not "restrict the sale of
sensitive items ... to subnational entities such as certain terrorist
organizations or individuals."
A license is required for the export of all items controlled for
missile technology reasons on the Commerce Control List, regardless of
destination (except for Canada). Moreover, Sections 744.12, 744.13, and
744.14 of the EAR prohibit exports and reexports of any item subject to
the EAR to persons designated by the Treasury Department as Specially
Designated Global Terrorists (SDGTs), Specially Designated Terrorists
(SDTs), or Foreign Terrorist Organizations (FTOs), respectively. In
particular, Section 744.13 imposes a license requirement for the export
or reexport to an SDT of any item subject to the EAR. Moreover, the
Commerce Department maintains an extensive system of unilateral anti-
terrorism controls in addition to the controls it imposes on the export
of MTCR Annex items. Thus, we do not agree that the U.S. export control
system permits "sensitive items" to be legally exported for nefarious
end uses, as implied on page 5 of the proposed report. The discussion
on pages 22-23 of the draft report, in contrast, makes clear that the
issue raised by the GAO relates only to "items not listed in the
regulations on the Commerce Control List." If it is the position of the
GAO that such non-controlled items are "sensitive," and should be
included on the MTCR control list, the basis for this position should
be explained.
Thus, it is important to correctly describe the issues raised (p. 23)
by the example of one New Zealand resident purchasing uncontrolled
U.S.-origin items to develop a "cruise missile." The issues raised by
this example are: (1) whether additional items should be controlled for
export, and (2) whether the "catch-all" control should be broadened to
include additional countries or end-users, and if so, how. As to the
first issue, it is difficult to comment without a detailed
understanding of the type of "cruise missile" the New Zealand resident
constructed and the type of U.S. components he used. However, in
general, as stated above, the Commerce Department's position is that
the United States, together with other MTCR members, effectively
controls the items of greatest significance for cruise missiles and
UAVs that pose concerns for U.S. national security. Regarding the
second issue, we address this issue below (see Section ILA).
Finally, we strongly request that GAO clarify the statements attributed
to Commerce officials that "they have no recourse in this or similar
cases" (p. 23) and "must wait to act until after proliferators or
terrorists have used the weapons that they might develop with U.S.
components." It is correct that our enforcement authority is limited
with respect to the New Zealand transaction because the items were not
listed on the Commerce Control List and the New Zealand national was
not named on the Specially Designated National or Specially Designated
Terrorist lists. However, if Commerce learned that U.S. items not
included on multilateral control lists had been shipped to
proliferators or terrorists who were developing weapons with these
components, Commerce could and would take specific actions, which could
include (but are not limited to) the following. Commerce, working with
its law enforcement partners, could determine whether through
cooperation with other countries (under the Proliferation Security
Initiative (PSI) or otherwise) the items could be interdicted,
detained, and disabled. Further, Commerce could use its authority to
inform exporters that they cannot ship additional items to the end-user
without obtaining a license. See Sections 744.3(b) and 744.6(b).
11. Comments Regarding Draft GAO Recommendations:
The following are Commerce Department comments regarding the specific
GAO recommendations contained on page 36 of the draft report:
A. Modification of EPCI "Catch-all" Missile Proliferation Controls:
The proposed GAO report recommends that " . . the Secretary of
Commerce modify the Export Administration Regulations to require an
export license review for any item that an exporter knows or has reason
to know would be used to develop or design a cruise missile or UAV of
any range." We agree that, in consultation with the Technical Advisory
Committees and the interagency community, the Department should
consider whether the current catch-all provision sufficiently protects
U.S. national security interests.
The EAR catch-all provision applies only to MTCR Category I systems
i.e., those with a range of at least 300 kilometers and an ability to
deliver a 500 kilogram payload), and applies only to listed projects
and to countries listed in Group D:4 of Supplement 1 to Part 740 of the
EAR[NOTE 1], except when the Department of Commerce informs a U.S.
exporter of the requirement to submit a license application. In such
cases, the catch-all provision applies "anywhere in the world." See
EAR Section 744.3(b) and 744.6(b).
The limitations on the "catch-all" provision were intended to ensure
that the provision would not be so expansive as to place unwarranted
burdens on the exporting community and impede the flow of legitimate
trade. The GAO notes (p.14) that U.S. industry has identified an
increase in interest in UAV program acquisition abroad. Much of the
foreign interest comes from U.S. allies and partner nations. In
September 2002, the GAO stated that "Commerce seeks to
balance national security, foreign policy, and economic interests when
considering how to control items and review export licenses." See
"Export Controls: Processing for Determining Proper Control of Defense-
Related Items Needs Improvement," September 2002 (GAO-02-996), p.3. The
GAO's recommendation does not take into account the economic impact
that could result from the implementation of such a broad expansion of
the catch-all policy.
Any modifications to the catch-all policy should be carefully
considered in order to ensure that the controls protect U.S. national
security, but avoid unnecessary burdens on U.S. trade. For instance,
one option to consider would be to expand the list of countries and
end-users subject to the missile technology catch-all controls, but not
apply the catch-all provision to all U.S. exports. Another option would
be to expand the circumstances in which the catch-all provision
applies, e.g., to reduce the range requirement, but not apply the
catch-all controls to all cruise missiles and UAVs regardless of range.
As stated above, we agree with the GAO that it would be useful to
review whether the existing catch-all provision sufficiently protects
U.S. national security interests. However, we do not agree with the GAO
that there is a "gap" in U.S. export controls, if this term is intended
to imply that U.S. export control regulations do not address some
subset of transactions that clearly ought to be controlled. As
discussed above, we do not believe that the draft report demonstrates
this to be the case. A more accurate characterization would be to state
that the limited scope of the catch-all provision raises the question
of whether it ought to apply more broadly.
B. Review of Industry Compliance:
The proposed report also recommends that "the Secretaries of State,
Commerce and Defense, as a first step, each complete a comprehensive
assessment of cruise missile, UAV, and related dual-use technology
transfers to determine whether U.S. exporters and foreign end users are
complying with the condition on the transfers. The departments should
also conduct a greater number of post-shipment verification visits that
could help provide them with critical information to know whether
compliance is an issue that requires sustained investment in more
monitoring."
The Department suggests refining these recommendations in order to
provide a basis for interagency action. Specifically, the terms "cruise
missile, UAV, and related dual-use technology transfers" require more
precise definition. Given the limited resources available for compliance
monitoring, the U.S. government seeks to focus its attention on areas
of greatest concern. Accordingly, greater precision is needed regarding
the scope of transactions that the GAO believes may require increased
scrutiny.
We hope that these comments will prove useful to you as you proceed in
finalizing your report. Please feel free to contact us if you would
like to discuss any aspect of these comments.
Sincerely,
Kenneth I. Juster:
Signed by Kenneth I. Juster:
[NOTES]
[A] The countries listed in Group D:4 are: Bahrain, the People's
Republic of China, Egypt, India, Iran, Iraq, Israel, Jordan, North
Korea, Kuwait, Lebanon, Libya, Macau, Oman, Pakistan, Qatar, Saudi
Arabia, Syria, United Arab Emirates, and Yemen.
The following are GAOís comments on the Department of Commerce letter
dated November 14, 2003.
GAO Comments:
1. Commerce said that our report does not distinguish among the varying
threats posed by different types of cruise missiles and UAVs. Our
report does make distinctions between the threats posed by anti-ship
cruise missiles to U.S. naval forces, land-attack cruise missiles to
the U.S. homeland and forces deployed overseas, and UAVs as potential
delivery systems for chemical and biological weapons. As our report
stated, the potential for terrorist groups to produce or acquire
rudimentary cruise missiles or small UAVs using unlisted dual-use items
is an emerging threat that needs to be better addressed.
2. Commerce said that agreement was finalized at the September 2003
MTCR Plenary to add a new category of UAVs to the MTCR control list. We
have added information to the report to take this into account.
3. Commerce said that our report does not discuss action taken at the
September 2003 MTCR Plenary to include a catch-all provision in the
regime guidelines that could strengthen MTCR disciplines and address
some of the concerns of our report. While helpful, the practical impact
of this change is negligible. Nearly all MTCR members currently have
catch-all controls in their national export control authority.
Furthermore, as Commerce pointed out, the U.S. catch-all controls have
limited scope and do not address the type of situation presented in the
New Zealand example.
4. We believe that our explanation was clear as to how we applied
Commerce's guidance to select licenses that met Commerce's listed
criteria for receiving a PSV. As clearly noted in our report, we first
started with the 2,490 dual-use licenses with commodity categories that
Commerce had identified as relevant to cruise missile and UAV items.
Second, we selected those licenses having only commodity categories
identified in Commerce guidance as chokepoint technologies. Third, we
matched these licenses to a recipient country identified as a country
of missile proliferation concern or as a conduit country. This analysis
resulted in 20 licenses. When we found that two of the 20 licenses we
identified had been selected for a PSV, we asked Commerce officials to
explain which of the other variables (information about the parties to
the transaction, proposed end use, previous licensing history, etc.)
mitigated the need for a PSV. As we reported, Commerce officials could
not explain which factors lessened the need for a PSV for the remaining
18 licenses.
5. Commerce stated that there is ambiguity in our report as to whether
the gap relates to items listed on the Commerce Control List or to
items that are not listed because they are not considered as sensitive
for missile proliferation reasons. Our references to the gap in the
regulations refer to dual-use items that are not listed on the Commerce
Control List. We have made changes to the draft to clarify this point.
6. Commerce stated that if it is GAO's position that noncontrolled
items are sensitive and should be placed on the MTCR control list, then
we should explain the basis for this position. We are not suggesting
that unlisted items should be added to the MTCR control list to deal
with the issue we identified in the New Zealand example. As indicated
in our recommendation, the vehicle to address this gap would be an
expansion of Commerce's catch-all provision whereby license reviews
would be required when the exporter knows or has reason to know that
items not on the Commerce Control List might be used by nonstate actors
for missile proliferation purposes.
7. Commerce states that the United States and MTCR members effectively
control the items of greatest significance for cruise missiles and UAVs
that pose concerns for U.S. national security. We agree that MTCR
covers items of greatest significance for cruise missiles and UAVs that
pose concerns posed by national missile programs. However, Commerce
needs to recognize the potential for nonstate actors, particularly
terrorists, to legally acquire unlisted items for use in missile
proliferation.
8. Commerce acknowledges that its enforcement authority is limited
concerning items not listed on the Commerce Control List and entities
not named on the terrorist lists. Nonetheless, it asserts that it could
take specific actions if it learned that U.S. items had been shipped to
proliferators or terrorists that were developing weapons with these
components. However, it is not clear how this information would come to
Commerce's attention because current regulations do not require, or
inform, an exporter to seek a license review in this type of situation.
9. Commerce agrees to consider whether the catch-all provision
sufficiently protects U.S. national security interests. We agree that
such a review in consultation with the Technical Advisory Committees
and interagency community would be an important first step in
identifying the sufficiency of the provision to cover nonstate actors
and ways to modify it to address the gap. Consequently, we have
modified our recommendation accordingly.
10. The gap that we identified in our report is in the catch-all
provisions. We are not suggesting that additional items be added to the
control lists. Currently, the catch-all regulations require an exporter
to submit a license application when he knows or has reason to know
that an unlisted item would be used for missile proliferation purposes.
However, this provision applies only to specific missile proliferation
projects or countries identified on a narrow list in the regulations.
The New Zealand citizen was not covered under the catch-all provisions.
[End of section]
Appendix III: Comments from the Department of Defense:
ASSISTANT SECRETARY OF DEFENSE:
2900 DEFENSE PENTAGON
WASHINGTON, DC 20301-2900:
INTERNATIONAL SECURITY POLICY:
Mr. Joseph A. Cristoff:
Director, International Affairs and Trade
U.S. General Accounting Office:
441 G Street, N. W. Washington, D.C. 20548:
Dear Mr. Cristoff:
This is the Department of Defense (DoD) response to the GAO draft
report, "NONPROLIFERATION: Improvements Needed to Better Control
Technology Exports for Cruise Missiles and Unmanned Aerial Vehicles,"
dated November 4, 2003 (GAO Code 320165/GAO-04-175).
DoD has carefully reviewed the draft report and partially concurs with
the first recommendation and fully agrees with the second
recommendation. Enclosed is DoD's response to the recommendations. Our
technical comments were provided to GAO for review.
We appreciate the opportunity to comment. If you have any questions
concerning this matter, please contact Mr. Clark Adams at 703-695-8124
or via e-mail [clark.adams@ osd.mil].
Signed by:
Mira R. Ricardel
Acting:
Enclosure:
GAO DRAFT REPORT - DATED NOVEMBER 4, 2003 GAO CODE 320165/GAO-04-175:
"NONPROLIFERATION: Improvements Needed to Better Control Technology
Exports for Cruise Missiles and Unmanned Aerial Vehicles":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretaries of State,
Commerce, and Defense, as a first step, each complete a comprehensive
assessment of cruise missile, unmanned aerial vehicles, and related
dual-use technology transfers to determine whether U.S. exporters and
foreign end users are complying with the conditions on the transfers.
(Page 36/ GAO Draft Report):
DOD RESPONSE: DoD partially concurs with the recommendation. While DoD
agrees that an assessment of U.S. exporter and foreign end-user
compliance with transfer conditions is important, the resources
involved to conduct a comprehensive review would be prohibitive and
unlikely to produce results better than what could be accomplished with
a random sample. Additionally, conducting a greater number of post-
shipment verification visits per Recommendation 2 will, over time,
provide the U.S. Government with a high-level of confidence that export
license conditions are being complied with by exporters and foreign
end-users. It will also allow the U.S. Government to determine whether
or not adequate resources are devoted to license compliance issues.
RECOMMENDATION 2: The GAO recommended that the Secretaries of State,
Commerce, and Defense conduct a greater number of post-shipment
verification visits that could help provide them with critical
information to know whether compliance is an issue that requires
sustained investment in more monitoring. (Page 36/GAO Draft Report):
DOD RESPONSE: DoD concurs with the recommendation.
[End of section]
Appendix IV: Comments from the Department of State:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department of State
Washington, D. C. 20520:
NOV 19 2003
Dear Ms. Westin:
We appreciate the opportunity to review your draft report,
"NONPROLIFERATION: Improvements Needed to Better Control Technology
Exports for Cruise Missiles and Unmanned Aerial Vehicles," GAO-04-175,
GAO Job Code 320165.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact Vann
Van Diepen, Office Director, Bureau Nonproliferation at (202) 647-1142.
Sincerely,
Signed by:
Christopher B. Burnham:
Assistant Secretary for Resource Management and Chief Financial
Officer:
Enclosure:
As stated.
cc: GAO/IAT - Steve Lord State/OIG - Luther Atkins State/NP - Mark
Fitzpatrick State/H - Paul Kelly:
Ms. Susan S. Westin, Managing Director, International Affairs and
Trade, U.S. General Accounting Office.
Department of State Comments on GAO Draft Report:
NONPROLIFERATION: Improvements Needed to Better Control Technology
Exports for Cruise Missiles and Unmanned Aerial Vehicles GAO-04-175/GAO
Code 320165:
We appreciate the opportunity to comment on the GAO's draft report
entitled "Nonproliferation: Improvements Needed to Better Control
Technology Exports for Cruise Missiles and
Unmanned Aerial Vehicles." The Department of State is pleased that the
draft report did not find evidence of misuse or diversion of unmanned
aerial vehicle (UAV) or missile-related technologies authorized for
export by the Department. However, the report is misleading and
inaccurate when it suggests that the Department does not monitor
exports to verify compliance with export authorizations and suggests
that the Department's Blue Lantern Program is not meeting its statutory
requirements. Over the past three years, the Department's Blue Lantern
Program has conducted over 1200 checks on exports of all types and
developed derogatory information in almost 200 cases. The Blue Lantern
Program has proven to be an effective means to verify the end-use and
end-users of export applications when questions arise and has 1)
deterred diversions, 2) aided in the disruption of illicit supply
networks used by rogue governments and international criminal
organizations, 3) helped the Department in making informed licensing
decisions, and 4) ensured exporter compliance with the Arms Export
Control Act (AECA) and the International Traffic in Arms Regulations
(ITAR).
The most important restrictions placed on export authorizations involve
controls over the end-user and the end-use of the article being
exported. The Department of State, through the export licensing
process, utilizes many tools to verify these critical elements, only
one of which is the Blue Lantern Program of pre-and post-license
checks. The Department, through the licensing process and in particular
the Blue Lantern Program, is actively engaged in verifying the bona
fides of end-users as well as the receipt and appropriate end-use of
defense articles and services, including UAV-and missile-related
technologies.
Establishing the appropriate end-use and end-users of a defense trade
transaction are the fundamental elements of our export control regime.
The licensing process as a whole assesses the risks and the bona fides
of each transaction by allowing the Department to establish a track
record with reliable foreign parties, whether foreign companies or
governments. This historical context of assessing the parties to the
export weighs into every licensing decision and its importance cannot
be discounted. Thus the draft GAO report's analysis that took a
snapshot of Blue Lantern activity without regard to past reviews of
the parties to these exports and without regard to other checks
performed during the license process is flawed.
It is not clear why the report's analysis excluded mention of or
reference to pre-license checks as part of the Department's efforts to
ensure compliance with arms export regulations. Pre-license checks
conducted under the Blue Lantern Program are critical to our efforts to
ensure licenses are issued to legitimate, reliable entities and for
specified programs or end-uses in accordance with national security and
foreign policy goals. They are a crucial element in building the
history of the reliability (or unreliability) of foreign parties,
particularly those that appear in a variety of license transactions
time after time. Pre-license checks augment the many controls and
checks used during the course of the licensing process to verify the
legitimacy of the parties involved and the end-use of the export.
Because the draft GAO report does not articulate the criteria it used
in determining what exports are UAV-related, we could not provide
details on the relevant pre-license checks as part of this response.
To illustrate the importance of pre-license checks, the Department
conducted such a check on an export of missile-related technology that
revealed that not all of the items requested on the license were
actually destined for the stated end-user, but for another end-user
located in a third country that was not identified on the license. The
pre-license check helped to establish that the intermediary involved
was not a reliable recipient of U.S. Munitions List articles.
Blue Lantern end-use checks are effective at verifying the end-use and
end-user of an export. While such checks may not be sufficient to
monitor highly technical provisos applied to
certain transactions, the problems and risks identified in the GAO
report, such as diversion to unauthorized entities or illegal
retransfers of U.S. technologies, are detectable and more importantly,
able to be deterred, by both pre-and post-license checks conducted
under the Blue Lantern Program as it currently exists.
The Department of State disagrees with the recommendation that State,
Commerce and Defense complete a comprehensive assessment of cruise
missile, UAV, and related dual-use
transfers to determine if U.S. exporters and foreign end-users are
complying with the conditions on the transfers. There is nothing in the
draft GAO report to indicate evidence of misuse or diversion that would
warrant such an extensive effort. However, the Department of State, as
part of its on-going efforts to improve its end-use check program and
in response to recent Office of the Inspector General (OIG)
recommendations, has already taken steps to improve the targeting of
Blue Lantern checks as well as to increase the number of end-use checks
conducted annually. As part of these overall efforts, we agree that
UAV-and missile-related technologies are important, and we will pay
special attention to the need for additional pre-and post-shipment
checks for these kinds of transactions.
The following are GAO's comments on the Department of State letter
dated November 19, 2003.
GAO Comments:
1. State said that it has conducted over 1,200 Blue Lantern checks on
exports of all types and developed derogatory information in almost 200
cases over the past 3 years. However, these checks and cases involved
both pre-license checks and PSVs and included more than cruise missile
or UAV items, according to Stateís most recent end-use monitoring
report[Footnote 48] For example, 428 checks initiated by State in
fiscal year 2002--of which 50 checks resulted in unfavorable
determinations--included firearms and ammunition, electronics and
communications equipment, aircraft spare parts, bombs, spare parts for
tanks and military vehicles, and night vision equipment.
2. State also said that the Blue Lantern program (1) effectively
verifies the end use and end users of export applications when
questions arise, (2) has deterred diversions, (3) helped disrupt
illicit supply networks, (4) helped State make informed licensing
decisions, and (5) ensured exporter compliance with law and
regulations. State added that the historical context of assessing the
parties to the export weighs into every licensing decision and its
importance cannot be discounted. We agree that the Blue Lantern program
can have a positive impact when State has the information needed to
allow it to act. This statement affirms our point that it is important
to obtain such information through improved monitoring, particularly
PSVs. However, given the limited number of either pre-or post-shipment
Blue Lantern checks focused to date on cruise missile and UAV-related
transfers, we question whether sufficient information has been obtained
in this area.
3. State said that it was unclear why our report's analysis excluded
pre-license checks as part of State's efforts to ensure compliance with
arms export regulations. As noted above, we did ask for such
information and learned that State conducted few pre-license checks for
its cruise missile and UAV transfers. While we agree with State that
pre-license checks are critical to providing assurances that licenses
are issued to legitimate, reliable entities and for specified programs
or end uses, they obviously cannot verify that exports are received by
the legitimate end user or used in accordance with the terms of the
license after shipment. We agree that seeking and receiving assurances
prior to licensing and shipment is a critical function that might
mitigate the need for a PSV check in many cases. However, State implies
that pre-license and other actions of the licensing process mitigated
the need to conduct PSV checks for all but 4 of its 786 licenses for
cruise missile, UAV, or related technology. These included 129 licenses
to non-MTCR countries, such as Egypt, Israel, and India.
4. State said that our report did not articulate the criteria we used
to determine what exports are UAV-related. State provided the criteria
we used to determine what State-licensed exports were cruise missile or
UAV-related. State officials queried their licensing database to search
for specific category codes and 12 keywords.[Footnote 49] The resulting
report that State provided to us contained 400 pages with 1,300
entries. We have added this information to our Scope and Methodology
section to clarify that State provided us with these criteria, the data
generated from applying the criteria, and information on Blue Lantern
pre-license and PSV checks for these licenses.
[End of section]
Appendix V:GAO Contact and Staff Acknowledgments:
GAO Contact:
David Maurer (202) 512-9627:
Acknowledgments:
In addition to the individual named above, Jeffrey D. Phillips, Stephen
M. Lord, Claude Adrien, W. William Russell IV, Lynn Cothern, and
Richard Seldin made key contributions to this report.
FOOTNOTES
[1] Countries of missile proliferation concern listed in the Export
Administration Regulations are Bahrain, China, Egypt, India, Iran,
Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Macau, North Korea, Oman,
Pakistan, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen.
[2] Catch-all controls are controls that authorize a government to
require an export license for items that are not on control lists but
that are known or suspected of being intended for use in a missile or
WMD program.
[3] End-use monitoring refers to the procedures used to verify that
foreign recipients of controlled U.S. exports use such items according
to U.S. terms and conditions of transfer. Verification measures,
referred to as end-use checks, range from contacting the appropriate
government or company representative to physical inspection by U.S.
personnel.
[4] Multilateral export control regimes are referred to as either
regimes or "arrangements," and the countries invited to participate in
them are variously referred to as "members," "participants," or
"participating states." In this report, we use the term "regimes" and
refer to participating countries as members. For more information, see
our report, U.S. General Accounting Office, Nonproliferation: Strategy
Needed to Strengthen Multilateral Export Control Regimes, GAO-03-43
(Washington, D.C.: Oct. 25, 2002).
[5] 22 U.S.C. §§ 2751 and following.
[6] 22 C.F.R. §§ 120 and following.
[7] 22 U.S.C. §§ 2311 and following.
[8] Related items include technical data, subcomponents, and spare
parts.
[9] 50 U.S.C. app. §§ 2401 and following. Executive Order 13222, 66
Fed. Reg. 44025 and subsequent presidential notices continue the export
control regime established under the act and the Export Administration
Regulations.
[10] 15 C.F.R. §§ 730-774.
[11] Interdiction is the action of law enforcement agencies physically
preventing the export of certain items from their country.
[12] 22 U.S.C. § 2785.
[13] Defense Acquisitions: Comprehensive Strategy Needed to Improve
Ship Cruise Missile Defense, GAO-NSIAD-00-149 (Washington, D.C.: July
2000).
[14] Foreign Missile Developments and the Ballistic Missile Threat
Through 2015, Unclassified Summary of a National Intelligence Estimate,
National Intelligence Council (Washington, D.C.: December 2001).
[15] China and Israel are not MTCR members, although Israel has
declared that it adheres to the MTCR guidelines and control list.
[16] Information on specific countries is classified.
[17] Information on specific countries and inventories is classified.
[18] This number does not include Iraq, which had a program to develop
military UAVs until Operation Iraqi Freedom, according to the Iraq
Survey Group. The Iraq Survey Group was tasked to find WMD after
Operation Iraqi Freedom. Statement by David Kay on the Interim Progress
Report on the Activities of the Iraq Survey Group Before the House
Permanent Select Committee on Intelligence, House Committee on
Appropriations, Subcommittee on Defense and the Senate Select Committee
on Intelligence, October 2, 2003.
[19] Upgrades have to fit within the weight, space, electrical, and
cooling capacities of the individual cruise missile or UAV for which
they are attended. Typically, changes to the outer dimensional lines of
either are limited so that the aerodynamics are not adversely affected.
In a well-engineered upgrade, the new components would take up no more
space or weight than those they are replacing.
[20] Feasibility of Third World Advanced Ballistic and Cruise Missile
Threat, Volume 2: Emerging Cruise Missile Threat, Systems Assessment
Group; National Defense Industrial Association Strike, Land-Attack and
Air Defense Committee (Washington, D.C.: August 1999).
[21] In addition, since 1998, the United States has presented two white
papers and five briefings to MTCR members to share information on
cruise missile or UAV-related issues.
[22] Unclassified Report to Congress on the Acquisition of Technology
Relating to Weapons of Mass Destruction and Advanced Conventional
Munitions, 1 January through 30 June 2002, Central Intelligence Agency
(Washington, D.C.: April 2003).
[23] U.S. General Accounting Office, Nonproliferation: Strategy Needed
to Strengthen Multilateral Export Control Regimes, GAO-03-43
(Washington, D.C.: Oct. 25, 2002).
[24] Although several criminal laws might apply to these acquisitions,
the laws do not specifically apply to the export control process. Thus,
bringing prosecutions under these criminal laws might be difficult.
[25] Knowledge and intent are elements of criminal violations of the
Export Administration Regulations, but are not necessary elements of
most administrative violations of the regulations, according to
Commerce.
[26] It is Department of Commerce policy to provide no public
information on open investigations.
[27] 2003 Foreign Policy Report, Department of Commerce.
[28] According to the Export Administration Regulations, 15 C.F.R. §
772.1, knowledge of a circumstance includes either positive knowledge
that the circumstance exists or is substantially certain to occur, or
an awareness that its existence or future occurrence is highly
probable. The conscious disregard of facts or willful avoidance of
facts is evidence that the person was aware of the circumstance.
[29] Catch-all controls are controls that authorize a government to
require an export license for items that are not on control lists but
that are known or suspected of being intended for use in a missile or
WMD program.
[30] "Items subject to the EAR" consist of the items listed on the
Commerce Control List in part 774 of the EAR and all other items
subject to the EAR. For ease of reference and classification purposes,
items subject to the EAR that are not listed on the Commerce Control
List are designated as "EAR99."
[31] 15 C.F.R. § 744.3(a).
[32] Such projects include the Indian Agni and Prithvi missile projects
and the Iranian Surface-to-Surface Missile Project.
[33] Although the EAR restricts exports to terrorist organizations and
individuals that are listed in the regulations, the regulations do not
apply to those that are not listed.
[34] Details of these cases are not publicly available.
[35] The participating countries are Australia, Britain, France,
Germany, Italy, Japan, The Netherlands, Poland, Portugal, Spain, and
the United States.
[36] 22 U.S.C. § 2785.
[37] The International Trafficking in Arms Regulations defines
significant military equipment as articles for which special export
controls are warranted because of their capacity for substantial
military utility or capability. 22 C.F.R. § 120.7.
[38] Related items may include spare parts, software, or technical
data.
[39] End-Use Monitoring Report for FY 2001: Commercial Exports,
Department of State (Washington, D.C.: 2002) and End-Use Monitoring
Report for FY 2002: Commercial Exports, Department of State
(Washington, D.C.: 2003).
[40] 22 U.S.C. § 2785.
[41] See General Accounting Office, Foreign Military Sales: Changes
Needed to Correct Weaknesses in End-Use Monitoring Program, GAO-00-208
(Washington, D.C.: August 2000).
[42] 50 U.S.C. app § 2411(a)(1).
[43] See 15 C.F.R. § 744.1, § 732.4(b)(3).
[44] The Commerce Control List does not designate whether an item is
useful for ballistic missiles or cruise missiles, according to Commerce
officials, but identifies only that an item is useful for missile
technology. Commerce identified 102 of 130 dual-use missile-related
categories in the Export Administration Regulations that contain items
that could be used either for cruise missile or ballistic missile
purposes, and 9 categories that could be used "primarily" for cruise
missile purposes. Three categories of items relate to UAVs or their
components. The 2,490 cruise missile or UAV-related licenses that we
reviewed were in these categories of items.
[45] Two countries are listed on both the list of missile technology
diversion concern and the list of conduit countries.
[46] Governments responding to our request were Israel, Japan, South
Africa, and Switzerland. Russia's and Canada's responses were provided
too late to be included in this report. Other countries that we queried
provided no information on end-use monitoring.
[47] State reported that the keywords were (1) UAV, (2) RPV, (3) Cruise
Missile, (4) Harpoon, (5) Tomahawk, (6) Slam, (7) Drone, (8) Prowler,
(9) GNAT, (10) Predator, (11) Altus, and (12) *UNMAN* and *VEHIC*.
[48] End-Use Monitoring Report for FY 2002: Commercial Exports,
Department of State (Washington, D.C.: 2003)
[49] State reported that the keywords were (1) UAV, (2) RPV, (3)
Cruise Missile, (4) Harpoon, (5) Tomahawk, (6) Slam, (7) Drone, (8)
Prowler, (9) GNAT, (10) Predator, (11) Altus, and (12) *UNMAN* and
*VEHIC*.
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