State Dept. Defends Stance on Export Policy

By Joshua A. Kutner

The debate over U.S. defense export controls and technology transfer to foreign countries is heating up, as the Clinton administration enters its final seven months. Many believe the current regulations are long-outdated and need to be changed, if not relaxed, to support weapon interoperability with NATO allies. But officials at the State Department claim that classified U.S. technology-capability secrets and national security may be at risk if such reforms are implemented.

Those in favor of loosening the export regulations believe that the United States should offer allies, such as the United Kingdom and Australia, the same privileges now enjoyed by Canada.

Canada had not been required to have a license for many U.S. defense exports under the International Traffic in Arms Regulations (ITAR) agreement, which was established in 1989. However, an April 1999 amendment to ITAR placed restrictions on certain exports to Canada, after it was discovered that illicit trade activities allegedly had been conducted. In 1998, two Iranian men living in Canada were indicted for allegedly trying to intercept components of U.S. Hawk surface-to-surface missiles. The United States does not sell weapons to Iran.

During his October 1999 visit to Ottawa, President Clinton ensured Canada that the exemption would be reinstated. A State Department spokesperson said that most of the parameters of the exemption have been put back in place. However, restrictions on specific firearms models and missile technologies have not been lifted.

Such an exemption supports the U.S. and Canada's mutual security interests in protecting North America. Yet, opponents of the exemption claim it causes the United States to lose track of its exports. The State Department, last year, was forced to tighten its leash on some of those exports to Canada, said the spokesperson, when it was reported that classified technology ended up in the hands of nations that are not permitted to receive U.S. exports.

Although the State Department supports expediting the export-licensing process, it is not ready to endorse such exemptions for overseas allies. The official said the State Department will continue ongoing discussions with the administration to determine the best possible solution.

"The State Department is gung ho about making as many changes as it takes to expedite the process of transatlantic exporting," the spokesperson said. "The concern is that we don't want the technology to end up in the wrong hands."

Some critics claim that those in favor of loosening control are only trying to boost profits for the U.S. defense industry. Other critics believe that trading with an adjacent country is much different than trading with overseas allies.

Those for and against changes to export policy recently brought their concerns to the podium at the 16th Annual NDIA International Conference, in Washington, D.C. Former Deputy Defense Secretary John J. Hamre particularly was emphatic about changing rules and regulations that were adopted in the 1970s. The way that weapon systems are manufactured today is much different than they were during that decade.

Side by Side
Today's weapon systems are made with components supplied by multiple vendors from around the world, said Hamre, who now serves as president of the Center for Strategic & International Studies, a Washington, D.C.-based think-tank. "Yet, we still have a government licensing process that was designed around the business practices of the 1970s. That's really quite typical of much government regulations. After all, the process of designing the regulations usually is very interactive with the private sector at the time they are designing the rules. But the private sector changes."

Today, many companies have locations around the globe. Satellite systems, for example, said Hamre, are built with components from many different countries. "We're trying to now license and control technology, when the manufacturing process has become transcontinental," he said. Such regulations can hamper military relationships with allies, Hamre added. Last year's NATO air war over Kosovo helped fuel this debate.

Hamre said he received a call from a Dutch ambassador, during the war, inquiring about an export license for the U.S. Maverick missile. "It is embarrassing when one of your best allies has to call you to try to plead to get a license so that his own forces can fight," said Hamre. But that is not the only concern.

Export and security restrictions also have prevented the United States from sharing technology capabilities with its allies so that they can fight on an equal level, said Hamre.

"It's going to be very hard for NATO, as an alliance, to stay together if we can't find ways to get our industrial independence to be part of the adhesive that holds us together rather than part of the explosive that blows us apart," he noted. "I'm not sure we can fight another Kosovo air war and still have NATO when it is over. It strained us, not in an operational sense, but in an organizational sense ... It was hard for American forces to fight side by side with European forces. And it isn't just because Europe doesn't spend enough money on defense-which is true. But it's also because the United States has, over the years, had such a narrow perspective on security that we have not been willing to share with allies the technology we are going to need to fight side by side."

Jacques Gansler, undersecretary of defense for acquisition, technology and logistics, told the conference that allied coalitions need to develop new defense systems cooperatively. "Unless all allied systems are fully interoperable, we will not achieve the effectiveness that we need," he said. The lack of a shared, interoperable communications system during the Kosovo operation, for example, forced U.S. pilots to talk to their allies out in the open, which could enable potential adversaries to listen in, Gansler noted.
Some U.S. allies choose to be in denial about military threats, said Gansler, because they do not have the technology. Thus, the United States needs to share it, he said.

A Larger View
"We now need to take a larger view," said Hamre, "and accept the risks that come with it." Hamre stopped short of identifying possible risks in changing the system, but was quick to blast those, albeit good-intentioned, individuals who believe the current system is foolproof. "People that think that our current export control system provides protection are kidding themselves," he said.

Some major problems with the current procedure, officials argue, are that 99.8 percent of license requests are approved. Such a high approval rate, they say, indicates that most of the scrutiny involves items that are not of a sensitive nature.

"We're spending too much of our efforts [on unimportant issues]," said Hamre. "Too much of our resources go into approving 99.8 percent of the licenses that come in the door. I really don't know why they come in the door to begin with, if we're going to end up approving 99.8 percent of them. I don't think the current system is adequately protecting our industry ... We need to have a much better way to control the important technology and stop wasting our time on the [unimportant things]."

William Reinsch, undersecretary of the Bureau of Export Administration at the Commerce Department, said there is a fundamental problem in how technologies are labeled. "We are calling things weapons that are not weapons," he said.

The approval process has improved somewhat, according to Gansler. From 1994 to 1998, the United States processed more than 11,000 defense export license requests, he said. In 1999, the Defense Department received more than 14,000. Last year, it took an average of 46 days to process each request. In April 2000, said Gansler, that figure was reduced to 12 days-a 75 percent decline.

But officials said a decrease in processing time doesn't solve the problems that are inherently wrong with the system, and changes still are needed. However, these changes are not likely to be implemented under the current administration, some government officials believe. The problem also can be blamed on a lack of understanding on Capitol Hill. Many members of Congress fail to grasp their country's own exporting regulations, according to Sen. Charles Hagle, R-Neb. This is in part because of a lack of leadership, he added.

The United States needs a commander-in-chief who understands the issue and provides strong leadership, said Hagle. A president who fully comprehends the issue can better influence those under his command. "It all flows from the president," he said. "We need to clear out the underbrush," said Hagle. "Tough decisions should not be pushed off on the bureaucracy."

Hagle called the secretaries of defense and state "operators" for the president. Tension between their agencies has created a stalemate in the exporting arena. "It doesn't help to have federal agencies fist-fighting each other," said Hagle.

The System Goes Bananas
Pamela Frazier, principal deputy assistant secretary of state for security operations, was quick to shoot down claims that the State Department does not support defense trade.

"It has been fashionable to talk about defense trade exports as something that we at the State Department are blocking," she said. "That is not true. We embrace it, and we recognize a need to deal with it in a way that makes the United States government supportive of that process in a way that helps American industry, but also helps our friends and allies."

The State Department is processing about 45,000 licenses a year, worth $26 billion in defense trade, said Frazier. Two-thirds of these licenses are processed without referral to the Defense Department, and the processing period currently averages around 24 days. The other third are referred for an interagency review.

Using a bunch of bananas as a visual aid, Frazier described the interagency activities that occur when determining whether a potential export has national security implications. Using the bananas as icons for exports, she passed one to James Bodner, principal deputy undersecretary of defense, who would determine if the banana has military uses or national security implications. If it is determined that the banana has civilian applications, it most likely would go to the Commerce Department. But if a decision cannot be made on the matter, all of the bananas are to go before Congress.

However, the lines between civilian and military technology have been blurred, according to Bodner. Both the State and Defense Departments agree that they have to prevent potential adversaries from exacerbating arms proliferation, but Frazier pointed out that many advocates of open trade primarily are concerned with high-end technology and fail to see the dangers on the low-end of the technology spectrum.

"Is the problem export controls? Why control these items to our closest allies, when we share most foreign policy and national security goals? Why not just control what is at the high end of technology?" she pondered. "Releasibility is not based just on protecting sensitive technologies. The defense trade control systems provide essential tools for advancing foreign policy and trade. Export controls are our first line of defense against conventional arms proliferation. Even the transfer of low-level technology, like small arms, can prove destabilizing in certain regions. Small arms are the only weapons used in 46 of 49 regional conflicts that occurred in the past decade. AK-47s [assault rifles] are considered WMD [weapons of mass destruction] in some [parts] of Africa."

While Bodner believes the United States must curb the threat of WMD proliferation, he said, it must make sure that high-risk cases get the most attention. Low-risk cases have been taking too much energy, he said. Bodner told the conference that the United States should offer some sort of incentive structure to allies who adopt U.S. technologies.

Some officials believe the European allies need to take more responsibility. "I wish Europe would spend more money on defense," said Donald Hicks, chairman of Hicks & Associates, McLean, Va. "But whatever happens, they are our friends. We have to find a way to make that work."

Hagle takes a confident approach to the matter. "We can fix the problems," he said. "We will fix the problems." Hagle, a member of the Senate Foreign Relations Committee, defects from his committee chairman, Sen. Jesse Helms, R-N.C., who is opposed to softened export regulations.

"Defense transactions must be licensed," said Marshall Billingslea, senior professional staff member of the Senate Foreign Relations Committee. Under revised regulations, the United States will be unable to keep track of its defense exports, he argued. The current process allows the country to deny and control exports. Billingslea charged that the proposed changes of not providing enough knowledge of what is done with the technology. "The process cannot work if the executive branch does not know what to tell Congress."

Billingslea said that many U.S. allies are tightening their security, and this does not mean that the United States should relax its own. "The United States will have zero credibility, if it does not practice what it preaches," said Billingslea.

Topics: International, Export Import Compliance, Government Policy

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