Export Controls

The U.S. export control system is basically run by two agencies. The Commerce Department licenses sensitive dual-use items, those with both civil and military uses, and the State Department licenses munitions exports. Both State and Commerce use computers to screen export applications, but they did not include on the watchlists many ineligible or questionable individuals and companies. Missing names included those on a Justice Department list of fugitives for export violations, parties for whom prelicensing checks had revealed derogatory information, and parties identified by intelligence reports as diverters or proliferators. Consequently, State and Commerce issued licenses to some of these parties. Although State and Commerce exchange some information on export policies and questionable license applications via interagency coordinating committees, the sharing of their watchlists has been limited. State is not monitoring manufacturing and distribution agreements by routinely collecting or reviewing annual sales reports. State attributes this lack of monitoring to staff shortages. In addition, State's agreement files are in disarray. To fulfill the statutory requirement that no munitions license be issued to a foreigner, State relies solely on the application's certification that the person signing the application is a U.S. citizen. State does not require documentary evidence and does only limited telephone checks of the certifications. State even approved some licenses when the applicants lacked the required certifications. GAO summarized this report in testimony before Congress; see: Export Controls: License Screening and Compliance Procedures Need Strengthening, by James F. Wiggins, Associate Director for Acquisition Policy, Technology, and Competitiveness Issues, before the Subcommittee on Federal Services, Post Office, and Civil Service, Senate Committee on Governmental Affairs. GAO/T-NSIAD-94-203, June 15, 1994 (20 pages).

GAO found that: (1) although both State and Commerce use automated computer systems to screen export applications for ineligible or questionable parties, they do not include many pertinent individuals and companies on their watchlists; (2) State and Commerce issue licenses to some parties without considering the available information against those parties; (3) because of procedural and system design deficiencies, the agencies' screening systems do not identify all the licenses involving watchlist parties; (4) State and Commerce do not routinely share the names on their respective watchlists despite the potential benefits and the agencies' similar export control missions; (5) State and Commerce issue licenses to parties that are on other agencies' watchlists; (6) while cooperation between State and Customs is excellent, cooperation between Commerce and Customs is poor; (7) State is not routinely collecting or reviewing annual sales reports; and (8) State does not require documentary evidence to prove U.S. citizenship for individuals applying for munitions export licenses.

Recommendations

Our 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.

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