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03.08

Technology Export Controls — Protection or Bureaucracy?

By George McClure

The topic may seem dull, but technology export controls are vital to U.S. security and competitiveness. Technology that could help other nations compete with the United States if released — or that could be useful to terrorists — is subject to export controls. The rub comes in weighing the needs of U.S. innovators for greater sales versus the harm to the national interest if the technology is divulged.

The International Traffic in Arms Regulations (ITAR) promulgate the Arms Export Control Act (AECA) and govern the export of defense articles from the United States. They are administered by the State Department’s Directorate of Defense Trade Controls [1].

Manufacturers and exporters of defense-related goods and technologies are aware that they are dealing with controlled goods. But those who manufacture and export civilian items, such as electronics and computer technology, may not be aware that export controls can apply to their goods. Civilian products that have military application are called "dual-use" items. Dual-use examples include communications equipment, computer equipment and software, and encryption technology. There are some 3,000 dual-use products. Within the specifications defined in the Export Administration Regulations (EAR), these items may require an export license.

A detailed list of items subject to ITAR can be found at www.fas.org/spp/starwars/offdocs/itar/p121.htm [2]. This list includes satellites (active and passive), spacecraft antennas and specialized GPS receivers, among many other items.

Faster ITAR Processing Sought

Established manufacturers and exporters recognize the need for export controls on sensitive technology. Their concern is the cumbersome nature of the licensing process and the time required for its completion. A survey reported in Aviation Week, found that 82 percent of responding American companies believe that processing times had increased over two years. In 2005, Northrop Grumman reported an average 57 days to receive a license. At Lockheed Martin, more than 220 people are dedicated to dealing with export control licenses, handling more than 2,000 transactions [3].

The Aerospace Industries Association is working on proposals to streamline the process, including one for an export control commission that could be offered after a change of administration in 2008 [4].

Joint Programs Hampered

A recent concern was sharing of technology for the F-35 Joint Strike Fighter with allies planning to buy the aircraft, including the United Kingdom. Britain has committed $2 billion to the development of the $256 billion aircraft. It had planned to buy 150 of the aircraft at $104 million each, but is having trouble getting access to the technology it will need to maintain the fighters over their 30-year lifetime, while upgrading their data networks and weapon systems. Of the nine countries involved in the development, Britain is the only Tier I partner. For six years, the United States and the United Kingdom have been talking about giving Britain a waiver from arms-trade regulations that require it to apply for a license whenever it wants to buy American military equipment. While the White House and State Department have supported a waiver, Congress has repeatedly blocked it. Problems here place in jeopardy further joint cooperation on a new class of armored personnel carriers, under the Future Combat Systems program, worth $150 billion [5].

Embargo Helpful

A major concern now is technology transfer to China. When the European Union proposed removing its embargo on arms sales to China, the White House expressed concern that Beijing might use the new weaponry against Taiwan, threatening U.S. forces and other countries in the region. The North Atlantic Treaty Organization (NATO) numbers 27 countries in one ITAR category. Fourteen major non-NATO allies constitute another category, with Taiwan also treated as if it were in this category.

The Pentagon said in a report, [6], that lifting the embargo would give China access to dual-use technologies that could be used to improve its weapons systems, and would also increase weapons proliferation to countries that the EU "wants to remain isolated," such as Iran, Burma, Sudan and Zimbabwe.

The report added that lifting the embargo would "lead to greater foreign competition to sell arms to the Peoples' Liberation Army, giving Beijing leverage over Russia, Israel, Ukraine, and other foreign suppliers to relax limits on military sales to China."

Monitoring Evasive Suppliers

Another concern is non-established suppliers, whose motives may not be well-understood. Some of these are storefront operations or trans-shippers supplying materials banned from one country through another country where those materials are allowed. Thus, items destined for Iran may be initially shipped to Singapore. Especially sought by Iran are spare parts for the F-14 Tomcat fighter, that were supplied to the Shah before his downfall in 1979. Since the U.S. Air Force decommissioned the last F-14, they have been marked for total destruction, but some parts slip through. Project Shield America has some 66 FBI Joint Terrorism Task Force units dedicated to fighting terrorism through export control [7].

Large gaps have been found in our lines of defense against export of sensitive technologies. Some 1,400 F-14 parts supposedly embargoed had been sold to the public [8, 9].

Terrorists As Future Beneficiaries

Advanced conventional weapons are traditional tools of warfare that will become more lethal as they incorporate technological advances into future versions. RAND Corporation researchers identified five broad categories of weapons that would pose new and greater risks if they are acquired by terrorists. The weapons are:

• Advanced mortar systems guided by global positioning satellites that could strike targets such as crowds or infrastructure from a long distance. These weapons pose the biggest threat among those studied because there is no effective counter technology for security forces.

• Sniper rifles with improved electronic instrumentation that would allow a relatively unskilled marksman a chance of striking a target up to 2 kilometers away — well beyond the area that security forces guarding an official would consider threatening today.

• Advanced infantry small arms that allow very accurate, short-range fire using grenades as well as some related advanced weaponry.

• Long-range antitank weapons that can destroy a vehicle from beyond 2 kilometers. New models of these weapons are more easily operated by someone with little training.

• Limpet mines (mines that are attached to a vessel) that particularly pose a threat to cruise ships and ferries. Conventional cargo and passenger inspections would not detect this threat.

RAND's report, Stealing the Sword: Limiting Terrorist Use of Advanced Conventional Weapons, is available for download at www.rand.org/news/press/2007/11/14/.

National Counter-Proliferation Initiative

In October 2007, the Departments of Commerce, Defense, Homeland Security, Justice, and State announced a new initiative to address the growing threat of illegal foreign acquisition of restricted U.S. technology. A record 108 nations were engaged in efforts to obtain controlled U.S. technology in 2006, according to an Intelligence Community report [10].

On 10 December 2007, U.S. Assistant Attorney General Kenneth L. Wainstein underscored the seriousness of the problem at the Practising Law Institute's 2007 Export Control Conference [11]:

[The] 108 countries that are known to be involved in collecting sensitive, controlled U.S. technology — [is] a startlingly high number when you think that there are only about 200 countries in the world all in all. And, as to just one country — the Peoples Republic of China — the U.S. Immigration and Customs Enforcement (ICE) has launched more than 540 investigations of illegal technology exports to China since 2000 and the Defense Criminal Investigative Service has opened 143 such investigations in the past year alone.

The intensity of these technology acquisition efforts is matched by their craftiness and their ingenuity. Export violators use any number of methods to circumvent our technology transfer controls. In addition to the two that I’ve already mentioned — attendance at trade fairs and joint ventures with American businesses — we also see foreign governments using official delegations as platforms for illegal collection.

In fiscal year 2005 alone, delegations from the few countries that are the most flagrant violators requested a total of over 3,000 official visits to military bases and/or defense industry facilities.

We see them using foreign students on occasion — students who come to study in high-tech fields and thereby get exposure to our sensitive technologies. While the vast majority of foreign students come here to study without any criminal designs, a good number do, and it’s no coincidence that several of the countries that send the most students happen to be the most active and determined collectors of our technology.

We see them using the Internet. The Intelligence Community routinely finds evidence of foreign intrusions intended to acquire sensitive data.

And finally, we see them making regular use of the most traditional and direct approach — which is simply to have a buyer call or e-mail around and ask American companies to sell them controlled technology. They typically lie about the end-user, claiming the technology will be used domestically. On occasion, they find a company that unwittingly sells them the technology. But on other occasions, they find an individual or a company that wittingly and willingly succumbs to the temptation to skirt the export controls and make a buck.

And these [enforcement] efforts are bearing fruit. In just the past month, we’ve seen charges or convictions in over ten different export control cases, including:

• The conviction of a Detroit man for trying to send night vision goggles, thermal imaging camera equipment and Boeing GPS modules to Hezbollah

• The filing of new charges against a scientist in Hawaii for plotting to assist China with development of its new generation cruise missile technology

• And, the indictment of a woman in San Diego for conspiring with a Chinese agency to export accelerometers that calibrate the g-forces in nuclear and chemical explosions and have applications in the development of “smart” bombs.
  

Critical Dual-Use Equipment Improperly Sent to Pakistan

Oscilloscopes and triggered spark gaps, destined for Pakistan, were monitored by authorities after learning of the orders for them.

In 2002, some Tektronix oscilloscopes were obtained by an Islamabad, Pakistan, dealer who was aware of export controls for this model, but did not obtain the necessary licenses before the equipment was shipped from the United States to a broker in South Africa and then to Pakistan. Because these particular models of oscilloscopes have applications in the testing and development of nuclear weapons and missile delivery systems, the Department of Commerce requires anyone seeking to export them to certain countries, including Pakistan, to obtain a license.

In June 2003, the Islamabad dealer sent an e-mail to the South African broker asking him to purchase triggered spark gaps for a customer in Pakistan. Triggered spark gaps are high-speed electrical switches that are often used in a medical device known as a lithotripter, which doctors utilize in treating kidney stones. Triggered spark gaps also have military applications. One such application is as a detonator for nuclear weapons. Accordingly, the Department of Commerce controls the export of triggered spark gaps to certain countries, including Pakistan, for nuclear non-proliferation reasons. Exports of triggered spark gaps to South Africa, unlike Pakistan, are not prohibited.

The triggered spark gaps sought were manufactured by Perkin Elmer Optoelectronics of Salem, Massachusetts ("Perkin Elmer”).

In July 2003, an anonymous source informed agents of the Office of Export Enforcement (OEE) of the Department of Commerce and U.S. Immigration and Customs Enforcement (ICE) that the South African broker was in the process of using a broker in Secaucus, New Jersey, to obtain 200 Perkin Elmer triggered spark gaps for ultimate shipment to Pakistan through South Africa. The agents approached Perkin Elmer, which agreed to cooperate in the investigation and to render inoperable the triggered spark gaps that the New Jersey broker was in the process of ordering.

In October 2003, the OEE and ICE agents were able to track the first installment of 66 triggered spark gaps as the package traveled from the United States to South Africa and then on to Pakistan through the United Arab Emirates [12, 13].

China Received Other Dual-Use Equipment

Night vision goggles were exported without State Department licenses by ITT Corporation to the People’s Republic of China, Singapore and the United Kingdom in 2001, along with technical data about a laser countermeasure “light interference filter.” The company received the largest monetary penalty ever for a defense contractor, $100 million, for its criminal violation of the AECA. The fine can be halved if ITT spends $50 million on R&D to build better night vision goggles [14].

Is The Process Too Cumbersome?

Critics of export restrictions argue that they only slow the acquisition of critical technology, until it can be obtained from sources other than the United States. The launch in China of a satellite aboard a Chinese rocket booster, with no U.S. components, is cited as an example [15]. More than a decade ago, Hughes Aircraft and Loral Corporation improperly divulged sensitive U.S. technology to China in helping them overcome a stage separation problem which was causing launch failures and the loss of U.S. commercial payloads the Chinese had been contracted to put into orbit. Another example is the development of composite graphite fiber materials for a space plane, developed by a U.S. entrepreneur and funded by a British adventurer [16].

The Association of American Universities is on record as opposing ITAR because of the added difficulties it imposes on their research activities [17]. Examples of problems cited:

• University researchers face unreasonable new restrictions on communicating with international collaborators. In one case, American university scientists were collaborating with European scientists on a NASA-supported research mission that incorporated an instrument built by the Europeans. Since the spacecraft was American, however, the U.S. scientists could not share incoming data from the spacecraft with the European scientists unless they first obtained an export license. University researchers have been following NASA's guidelines on ITAR carefully because they personally can be fined $1 million for even unknowing violations of ITAR.

• Government RFPs suggest that an ITAR license may be required before discussing a proposed project with foreign collaborators. NASA's Small Explorer (SMEX) Mission of Opportunity Q&A for Proposals requires international support for research projects, but then advises that a university may need an export license before even discussing the idea or possible project with the intended collaborators.

• Expert project personnel have been excluded from projects. A Chinese national post-doc working at a U.S. university wrote software for the NASA-funded Gravity Probe-B project, which was sent to NASA for the agency's review. NASA stamped the report and software "ITAR-controlled" and insisted that the individual who wrote it obtain an ITAR license before reading the agency's comments on his work.

References

[1] International Traffic in Arms Regulations (ITAR), Official Version, published 1 April 2007, U.S. Department of State, Directorate of Defense Trade Controls, Available www.pmddtc.state.gov/official_itar_and_amendments.htm.

[2] ITAR, Part 121-The United States Munitions List, Federation of American Scientists, Available www.fas.org/spp/starwars/offdocs/itar/p121.htm.

[3] S. Weinberger, “Industry, Government Make Renewed PushTo Change U.S. Export Control Regime,” Aviation Week and Space Technology, 17 July 2006, Available www.aviationweek.com/aw/generic/story_channel.jsp?channel=defense&id=news/aw071706p1.xml. (Includes results of a survey of 44 aerospace and defense companies conducted by Booz Allen Hamilton.)

[4] Ibid.

[5] "Fighter jets," in The Economist, 26 January 2006, Available www.economist.com/world/britain/displaystory.cfm?story_id=E1_VQQQRQQ (password required).

[6] D. Sevastopulo, "Pentagon urges China to be more open about spending," FT.com, 23 May 2006, Available http://search.ft.com.

[7] U.S. Department of Homeland Security, Bureau of Immigration and Customs Enforcement, "Project Shield America: Strategic Investigations," Powerpoint slides, published by Exportcontrol.org, 2004, Available www.exportcontrol.org/library/conferences/1379/3Strategic_-_Shield_America_ao_052803.pdf.

[8] Associated Press, "Investigators: F-14 parts sold to public," USA Today, 1 August 2007, Available www.usatoday.com/news/washington/2007-08-01-f14parts_N.htm.

[9] Associated Press, "U.S. sees more smuggling of war hardware to China, Iran," USA Today, 11 October 2007, Available www.usatoday.com/news/washington/2007-10-11-arms_N.htm.

[10] U.S. Department of Justice, "Justice Department and Partner Agencies Launch National Counter-Proliferation Initiative," News release, 11 October 2007, Available www.usdoj.gov/opa/pr/2007/October/07_nsd_806.html.

[11] K. Wainstein, "Prepared remarks of Kenneth L. Wainstein, U.S. Department of Justice Assistant Attorney General for National Security," presented at the Practising Law Institute's 2007 Export Control Conference, Washington, D.C., 10 December 2007, Available www.usdoj.gov/nsd/docs/2007/klwainstein_remark_121007.pdf.

[12] The Center for International Trade & Security, Export Control Newsletter, No. 59, 25 July 2005 – 8 August 2005, Available www.uga.edu/cits/documents/html/xcnews59.htm.

[13] M. Schapiro and C. Herrman, "Special Report (Part 2): The Double Life of Asher Karni," PBS FRONTLINE/World, 21 April 2005, Available www.pbs.org/frontlineworld/stories/nuclear/part2.html.

[14] "Justice Department Statement On ITT Night-Vision Fine," The Manufacturer.com (U.S.), 29 March 2007, Available www.themanufacturer.com/us/content/5348/Justice_
Department_StatementOn_ITT_Night-Vision_Fine.

[15] T. Dinerman, "Fixing ITAR: the saga continues," The Space Review, 16 May 2005, Available www.thespacereview.com/article/374/1.

[16] Ibid.

[17] "ITAR and Universities: Universities are Educational Institutions, Not Munitions Manufacturers," Association of American Universities, March 2002, Available www.aau.edu/sheets/ITAR.html.

George F. McClure is Technology Policy editor for IEEE-USA Today’s Engineer and a member of IEEE-USA's Committee on Transportation and Aerospace policy. Comments may be submitted to todaysengineer@ieee.org. Opinions expressed are the author's.