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12 April 2000

US Department of State
International Information Programs

Washington File
_________________________________

Source: http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=00041203.clt&t=/products/washfile/newsitem.shtml

12 April 2000

### State Dept.'s Holum on Multilateral Export Controls

         (U.S. continues pressing for stronger regime, he says) (2560)

         John Holum, the State Department's senior adviser for arms control,
         says that the United States continues pressing to strengthen the
         Wassenaar Arrangement multilateral regime for controlling exports of
         advanced technology and conventional armaments.

         In April 12 testimony before the Senate Governmental Affairs
         Committee, Holum said the United States wants more disclosure by
         Wassenaar members about the exports they approve.

         Now a Wassenaar member discloses a decision undercutting another
         member's denial of an export license only for the most-sensitive
         items. Holum said the United States wants the undercutting provision
         applied more broadly.

         He said the United States also wants Wassenaar agreements on
         controlling portable surface-to-air missiles.

         The Wassenaar Arrangement succeeded the much more powerful Cold
         War-era Coordinating Committee for Multilateral Export Controls
         (COCOM). Holum said the annual Wassenaar meeting in December
         demonstrated that the 33 members are converging more on ways to make
         the regime more responsible, transparent and accountable.

         "This is a noteworthy achievement after just four years," he said.
         "Nonetheless, significant national differences remain, both in
         substance and procedure, that will require patient persuasion and
         diplomacy to resolve."

         He said the best way for the United States to achieve its
         export-control objectives is in multilateral regimes such as
         Wassenaar.

         The United States must realize that it cannot regain the veto of other
         countries' proposed exports as it had under COCOM.

         "Our allies simply would not agree to it," he said.
         Following are terms and abbreviations used in the text:

         -- COCOM: Coordinating Committee for Multilateral Export Controls.

         -- dual-use goods: goods with both civilian and military applications.

         -- WA: Wassenaar Arrangement.

         -- WMD: weapons of mass destruction.

         -- Australia Group: multilateral export-control regime for chemical
         and biological weapons.

         Following is the text of Holum's testimony as submitted for the
         committee's record:

         (begin text)

         Statement of John D. Holum
         Senior Adviser for Arms Control and
         International Security
         Department of State
         Before the Senate Governmental Affairs Committee

         Wassenaar Arrangement and the Future of Multilateral Export Controls

         The Department of State appreciates this opportunity to discuss the
         Wassenaar Arrangement and the future of multilateral export controls.
         I am encouraged by congressional interest in this important subject,
         and look forward to working closely with the Committee on this and
         other multilateral export control issues. I would like to begin my
         testimony by describing the Wassenaar Arrangement, then discussing
         Wassenaar's strengths and weaknesses.

         It is important to note at the outset that Wassenaar is not, and
         cannot be, COCOM. COCOM, and other multilateral control mechanisms
         faced a clearly defined, mutually agreed strategic threat, and
         addressed that threat by embargoing exports of arms and sensitive dual
         use items to proscribed destinations. Along with our allies, we agreed
         upon procedures for controlling exports to these destinations,
         including allowing for any nation to veto a specific export.

         The end of the Cold War, the disintegration of the Soviet Union, moves
         toward democracy and market-based economies in the former Warsaw Pact,
         deep cuts in the strategic arsenals of both sides, and the goal of
         assisting economic and political reform in East Europe, Russia and the
         other newly independent states -- rather than retarding their economic
         development -- all led our allies to the view that the COCOM,
         arrangement had outlived its strategic rationale and could not be
         sustained. The U.S. eventually joined this view when it became clear
         that our trading partners would no longer agree to follow the
         procedures outlined in the COCOM arrangement. In the waning days of
         COCOM, the U.S. sought to preserve the controls for as long as
         possible, and pushed to establish a new worldwide arrangement to cover
         conventional arms and related technologies. It was only through U.S.
         leadership that we were able to stem the flow of arms and sensitive
         technologies to places such as Iran, Iraq, North Korea and Libya,
         destinations largely ignored by the former COCOM.

         The world has changed for the better. Many of the targets of COCOM now
         are members of Wassenaar, as well as trading partners, friends, and in
         some cases treaty allies.

         Our former COCOM partners recognize that responsible national export
         controls and policies remained indispensable to promote international
         peace and security in the post-Cold War environment, even though they
         opposed, and continue to oppose, any COCOM-like control regime.
         Despite this broad agreement, it was only through persistent and
         strong U.S. leadership that COCOM members, eventually with
         participation by Russia, designed a new multilateral export control
         regime to address the new challenges posed by regional instability and
         states whose behavior threatened international security.

         That new regime is the Wassenaar Arrangement (WA) -- the first global,
         multilateral arrangement covering both conventional weapons and
         sensitive dual-use goods and technologies. It was negotiated and
         established in the mid-1990s at the same time that COCOM was
         disbanded, when it became apparent that the Cold War's East-West
         export controls no longer were appropriate. However, Iraq's buildup of
         arms before the Gulf War demonstrated the need for some form of global
         export regime and the Wassenaar Arrangement responded to this
         challenge by covering more than just dual-use items, as had been
         COCOM's focus. The Wassenaar Arrangement received final approval by 33
         co-founding countries in July 1996, and began operations in September
         1996.

         The WA is designed to prevent destabilizing accumulations of arms and
         dual-use goods and technologies. The Arrangement encourages
         transparency, responsibility, consultation and, where appropriate,
         national policies of restraint. In doing so, the WA fosters
         accountability in transfers of arms and dual use goods and
         technologies. The Arrangement also provides a venue in which
         governments can consider collectively the implications of various
         transfers on their international and regional security interests. It
         also seeks to enhance cooperation to prevent dangerous transfers.

         WA members maintain export controls on items covered by the Wassenaar
         Munitions and Dual Use lists. These lists regularly are reviewed by
         experts of the Participating States and revised as needed. However,
         the decision to transfer or deny any controlled item remains the
         responsibility of individual member states. There are not, as there
         were in COCOM, case-by-case prior reviews of proposed exports to
         proscribed destinations, or vetoes on proposed exports. To facilitate,
         meeting the WA'S principal objective of preventing destabilizing
         accumulations, members report on their decisions to transfer or deny
         to non-members certain classes of weapons and dual-use technologies.
         Again unlike COCOM, Wassenaar members are not constrained to honor
         each other's denials, but consultations are encouraged in such cases.

         In order to enhance transparency in arms transfers, Wassenaar members
         report semiannually on their deliveries to non-members of seven
         weapons categories derived from the UN Register of Conventional Arms.
         These categories are Battle Tanks, Armored Combat Vehicles, Large
         Calibre Artillery Systems, Combat Aircraft, Attack Helicopters,
         Warships, and Missiles and Missile Launchers.

         In order to promote transparency and like-mindedness, Wassenaar
         members also report on their transfers to non-members of dual use
         goods. The Wassenaar List of Dual Use Goods and Technologies consists
         of a Basic List of controlled items, on which members semiannually
         report aggregated license denials. The Basic List is subdivided into a
         Sensitive List of technologies on which members report individual
         denials of licenses within 30-60 days. In addition to these individual
         denials, members also report semiannually aggregated numbers of
         licenses issued or transfers made. Finally, the Sensitive List is
         further subdivided into a Very Sensitive List, consisting of
         technology subject to extreme vigilance in national licensing
         decisions.

         Although no country is an explicit target of the WA, members are
         committed to dealing firmly with states whose behavior is a cause for
         serious concern. There is broad agreement that these states presently
         are Iran, Iraq, Libya and North Korea. Wassenaar members deal with
         these "countries of concern" by preventing, through shared national
         policies of restraint, their acquisition of armaments and sensitive
         dual use goods and technologies for military end-use.

         Wassenaar provides for the first tine a global mechanism for
         controlling transfers of conventional armaments, and a forum in which
         governments can examine and debate the implications of various
         transfers on their international and regional security interests. It
         also calls attention to potentially destabilizing accumulations of
         weapons, and to situations that may call for concerted actions.

         The United States works actively within this unique forum to advance
         our national interests. Wassenaar has addressed such topics as the
         conflict in Sudan, North Korea's weapons production programs, Iran's
         conventional arms procurement objectives, arms flows to areas of
         conflict in Africa, and the situation in Kosovo. At the December 1996
         Plenary meeting, members issued a public statement confirming that
         they do not transfer arms or ammunition to Afghanistan. In 1997,
         members reiterated the need to exercise maximum restraint when
         considering licenses for the export of sensitive items to destinations
         where the risks are judged greatest. This statement was refined in
         1998 to include regions in conflict. In 1999 members discussed Small
         Arms/Light Weapons and the possibility of developing common export
         guidelines for man-portable Surface-to-Air missiles (MANPADS). They
         agreed to a modest increase in arms transparency, and reaffirmed their
         policies of "maximum restraint" regarding arms exports to areas of
         conflict.

         Wassenaar is more than just a forum for discussion. The United States
         has helped establish and maintain Wassenaar's control lists, has
         benefited from sharing data on arms and technology transfers, and has
         gained insight into the policies and positions of other members. It
         has also served to promote and reinforce strong norms of responsible
         export behavior, which over time has encouraged restraint.

         As head of the U.S. delegation to the 1999 Wassenaar Plenary meeting,
         I am well aware that the Arrangement falls short of U.S. goals in some
         important areas. We would like to see more transparency in both arms
         and duel use transfers, more targeted information sharing, more
         discussion of common problems and possible solutions, as well as some
         form of a no-undercut provision for dual use denials. We would like to
         get agreement on guidelines for MANPADS transfers, controls on
         brokering, and possibly an arms transfer code of conduct.

         These are ambitious, but attainable, goals. I observed at the Plenary
         that national views increasingly are converging around the ideas of
         responsibility, transparency and accountability. This is a noteworthy
         achievement after just four years. Nonetheless, significant national
         differences remain, both in substance and procedure, that that will
         require patient persuasion and diplomacy to resolve.

         We are well aware of the strong advantages to a veto-type arrangement
         but it is critical to recognize that we will never be able to impose
         one unilaterally. Our allies simply would not agree to it.
         Additionally, a veto-style arrangement could actually harm U.S.
         exporters by increasing dramatically license processing times by
         requiring coordination with as many as 33 countries, ceding to those
         outside the regimes the ability to respond in a more timely manner. It
         is also important to recognize that in many fields, the U.S. is the
         leader technologically; we do not believe that it would be
         advantageous to delegate to other countries whose industries are not
         as advanced as the U.S. the right to determine which sales can and
         cannot be made.

         The Future of Wassenaar

         As you prepare for your upcoming travel to Europe. I would recommend
         looking to the future, rather than the past. Wassenaar is a product of
         the post-Cold War period, and faces a dramatically different security
         environment than institutions developed during that period.

         In the new global economy we must lead by example. I believe we have
         made solid steps in this direction, and that a consensus is emerging
         among Wassenaar partners that reflects their commitment to responsible
         transfers. This commitment already is implemented in the national
         policies of Wassenaar partners, and ultimately is what unites us. The
         most effective way to achieve U.S. objectives is to continue to act
         collectively to assess the risks, and to coordinate policies.

         The Wassenaar Arrangement provides a unique venue for the evaluation,
         coordination and cooperation that can yield a safer, more peaceful
         international environment. We will continue to make a concerted effort
         in this forum to foster greater like-mindedness as we examine
         sensitive transfers, assess the risks, and determine appropriate
         responses at the national level.

         The Future of Multilateral Export Controls

         While arms and sensitive dual-use technology transfers to State
         sponsors of terrorism have dropped dramatically since the beginning of
         the decade, we must continue our work to constrain the ability of
         these countries to develop weapons of mass destruction and advanced
         conventional weapons. Recognizing that the spread of weapons of mass
         destruction and sophisticated conventional arms is the most important
         security threat in the post-Cold War world, the role of the
         multilateral nonproliferation regimes has now shifted to focus on the
         behavior of programs of proliferation concern and the entities that
         supply and procure for them, rather than targeting particular
         recipient countries.

         Our export control system for the post-Cold War world responds to
         these new security threats. We have emphasized broadening
         international adherence to our non-proliferation and export control
         goals. Especially since 1991, significant strides have been made in
         strengthening the contributions of export controls to nuclear
         nonproliferation. Moreover, memberships in both the Zangger Committee
         and the Nuclear Suppliers Group together now include all of the
         significant nuclear supplier states and almost all relevant suppliers
         are members of the other regimes. Increasingly, countries that had
         been contributing to the proliferation problem -- such as Argentina,
         Brazil and South Africa -- are becoming part of the solution.

         With the backing of Congress, we have been able to assist former
         Warsaw Pact countries with weak border controls and weaker legislation
         to bolster their resources and to resist commercial incentives to
         trade in sensitive dual-use items, arms, and components of WMD. Our
         overall approach has been to:

         -- Reduce the demand for dangerous weapons and technologies through
         support for international non-proliferation norms and through
         strategies to reduce regional instability;

         -- Pursue a multilateral approach to achieving our nonproliferation
         goals through the Missile Technology Control Regime (MTCR), the
         Australia Group (AG), and the Nuclear Suppliers Group (NSG);

         -- Implement and further strengthen the Wassenaar Arrangement (WA),
         and use the WA to promote responsible transfers of arms, sensitive
         duel-use goods, and related technology, and require transparency in
         such transfers;

         -- Work with key suppliers, transshipment centers, and intermediaries
         that are not members of the nonproliferation regimes to adopt export
         policies and practices compatible with international standards,
         thereby increasing the number of countries, as described in the draft
         EAA, "whose policies and activities are consistent with the
         objectives" of the regimes; and

         -- Retain the ability to impose unilateral controls in those limited
         and extreme circumstances that may require them.

         We also continue the effort to reduce demand for dangerous weapons
         through regional diplomacy -- as in the North Korea, the Middle East
         and South Asia -- to respond to the underlying sources of stability
         and insecurity.

         I would like to thank the Committee for the opportunity to address
         this timely topic. Any form of export control requires difficult and
         delicate compromises. Multilateral export controls multiply these
         difficulties, but also multiply the rewards. The fact that so many
         countries participate in these regimes, and try to improve them, says
         that the rewards outweigh the difficulties. I look forward to working
         further with you on this important subject.

         (end text)

         (Distributed by the Office of International Information Programs, U.S.
         Department of State. Web site: usinfo.state.gov)

Source: http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=00041204.clt&t=/products/washfile/newsitem.shtml

See also Reinsch's April 4 testimony on reauthorization of the Export Administration Act: http://207.96.11.93/press/2000/SenateEAATestimony04042000.html

12 April 2000

### Commerce's Reinsch on Multilateral Export Controls

         (U.S. needs to build export-control consensus, he says) (1020)

         Under Secretary of Commerce William Reinsch says that the United
         States must approach consensus on export-control policy itself before
         it can exert more influence on other countries' policies.

         "The recent legislative debate revealed the differences among us are
         wide," Reinsch said, "and these differences do not provide a firm
         basis for U.S. leadership at this time."

         Reinsch made the comment in April 12 testimony before the Senate
         Governmental Affairs Committee.

         The main subject of Reinsch's testimony was the Wassenaar Arrangement,
         the 33-member regime for controlling exports of advanced technology
         and conventional armaments to rogue states and areas of instability.
         It succeeded the much more powerful Coordinating Committee for
         Multilateral Export Controls (COCOM).

         He told the committee to forget about suggestions for reviving COCOM
         or its forceful provision that allowed any member to block another's
         proposed export.

         "COCOM was a valuable tool for NATO in the Cold War," he said, "but it
         is gone and cannot be resurrected."

         Reinsch said the United States must recognize that it cannot persuade
         most other Wassenaar members to follow a number of unilateral U.S.
         export controls and trade sanctions.

         He said the United States should instead try to pursue more
         initiatives in areas of agreement with other Wassenaar members.

         For example, the United States proposes that other governments use
         broad authority to block any exports to destinations designated as
         posing a weapons proliferation threat even if the export items are not
         specifically prohibited in any control list. The United States itself
         uses such a "catch-all" provision.

         Reinsch said the United States must reduce the number of items subject
         to export controls, concentrating on those that are controllable and
         critical to advanced military capabilities.

         "This adjustment would put us in a better position to seek foreign
         cooperation with our national licensing decisions," he said.

         Reinsch also said the export-control community should continue
         pressing China to join Wassenaar and the other multilateral regimes
         that aim to prevent proliferation of weapons of mass destruction.

         Following is an excerpt from Reinsch's testimony as submitted for the
         committee's record:

         (begin text)

         Where Do We Go Next

         The Wassenaar Arrangement has a strong record of success in bringing
         new parties to observe the international norms of export controls and
         nonproliferation and in reducing sales of arms to dangerous places.
         Wassenaar provides the structure that could let us address the export
         control issues that have proved the most troubling over the past
         several years. I would like to conclude by listing a few issues and
         actions which the U.S. could consider as we move ahead in this
         difficult area.

         First, we need to recognize that much of the debate in the United
         States over export controls is out of sync with the rest of the
         industrialized world. This reflects in part larger differences over
         security policies, threat perceptions or transatlantic cooperation,
         but it forms a crucial backdrop to improving multilateral controls.
         But I hope we all agree that unless controls are multilateral they
         will have, except in a very few cases, questionable benefit for
         national security while putting our economic strength at risk.

         Second, we need to continue to consult with our allies and with other
         regime members on the scope for cooperation in improving controls. For
         conventional arms and related dual-use equipment, it may be less than
         we would wish. In particular, we must bear in mind that others will
         not adopt our sanctions policies. Related to that, we should continue
         our efforts to promote adoption of "catch-all" controls by our regime
         partners in order to ensure that adequate authority exists for
         controlling a wide range of technology to specific end users of
         concern.

         Third, in the context of Wassenaar, we need to refocus the list of
         dual-use controlled items on those that are controllable and critical
         to advanced military capabilities. The globalization of technology
         poses new challenges for U.S. security and limits the utility of
         export controls. Both the Wassenaar Arrangement and our own national
         export controls need to be adjusted in light of this, and this
         adjustment would put us in a better position to seek foreign
         cooperation with our national licensing decisions. We need to do a
         better job reconciling our domestic and multilateral controls.

         Fourth, we need to give up the myth of COCOM [Coordinating Committee
         for Multilateral Export Controls]. COCOM was a valuable tool for NATO
         in the Cold War, but it is gone and cannot be resurrected.

         Fifth, we need to continue efforts to get China to participate in
         multilateral regimes such as Wassenaar. To do this, China will need to
         make progress in adhering to the international norms for
         nonproliferation and arms sales.

         We must continue our efforts to encourage non-members to adhere to
         regime standards. The Department of Commerce, working closely with the
         State Department, has worked with the countries of the former Soviet
         Union and Warsaw Pact to develop comprehensive and effective export
         control systems. We have often found that even in cases where these
         governments are willing to take hard steps to keep items out of the
         hands of unreliable parties, they do not have the practical means or
         legal basis to do so. We have had some success encouraging them to
         take all the necessary steps, including adopting the control lists of
         the multilateral regimes, to allow them to adhere to the objectives of
         the regimes, but more needs to be done.

         Finally, we need to continue to work towards a national consensus, or
         as close as we can get to consensus, in our own national discussions
         over export controls. The recent legislative debate revealed the
         differences among us are wide, and these differences do not provide a
         firm basis for U.S. leadership at this time.

         The Wassenaar Arrangement is good place to start this effort and a
         good place to test our chances for success. If we can make the
         Wassenaar Arrangement work better, we will enhance both national and
         international security.

         (end excerpt)

         (Distributed by the Office of International Information Programs, U.S.
         Department of State. Web site: usinfo.state.gov)