Soviet Foreign Economic Policy and International Security

Eric Stubbs

• Publisher: Routledge
• Year: 2019
• Topic: Politics & International Relations
• eBook ISBN:
  9781315490274
• Subtopic: Politics
• Index: Politics & International Relations

More than half a decade has passed since Gorbachev launched his "prerestroika" programme to reform the Soviet Union, but the struggle between reformers and conservatives continues to rage while the final outcome, and even the goals of the programme, remains a mystery. Whatever the outcome of this transformation, its impact will reverberate well beyond the borders of the USSR to shape US security and commercial policies into the next century. This edited volume brings together original essays by US-Soviet relations scholars and international business and security experts to explore the many complex and critical issues that the United States must confront in developing its commercial and security policies for the next decade.

III

Export Controls and Technology Transfer

5

The Decline of Export Security Controls in the 1980s and Several Options for Policy Reform

Michael R. Lucas

In the 1980s, the United States and its West European allies have differed on the question of the proper role of security restrictions on export of advanced technology to Eastern Europe and the Soviet Union. The main organizational locus of this debate has been the Coordinating Committee on Multilateral Export Controls (COCOM). With the revolutionary reforms in the Soviet Union and Eastern Europe in the 1985–90 period, disputes in COCOM intensified and, at the same time, made possible a new Western consensus. The central question at issue was whether or not, and to what extent, high-technology exports to the East should be withheld in order to maintain military-technological and economic leverage over the Soviet Union and its allies—a position embodied in current U.S. military strategy—or used as an instrument to reduce East-West tension, promote Eastern economic recovery and democratic reforms, and deepen cooperation through disarmament. While all COCOM members agreed on the need to prevent Western technology from being used for military purposes by the Warsaw Pact, the majority of Western COCOM states have been more inclined than the United States to radically reduce COCOM restrictions. The United States has pursued a bifurcated policy: although its military-technological strategy (which dictates the preservation of COCOM) has not changed, the Bush administration has supported the revolutionary reforms in Eastern Europe and the Soviet Union and, in response to Allied pressure, significantly reduced the COCOM list of restricted goods in 1990. The United States has been faced with an “economic security” dilemma: on the one hand, U.S. security export restrictions have hurt U.S. economic interests and created deepening rifts in the Western alliance that threatened the very existence of COCOM by the late 1980s. On the other hand, U.S. security policy forbid radically reducing export security restrictions. In the traditional view of the U.S. Department of Defense (DOD), the staunchest U.S. defender of COCOM, lifting restrictions on advanced technology exports to emerging Eastern markets to the degree desired by non-U.S. COCOM members threatened to seriously prejudice U.S. military security by enhancing Soviet technological and military capabilities.

In this chapter I argue that changes in the international economy, the reform and revolutionary changes in the East, and other factors seriously eroded the foundations of the postwar export security system and explain the increased calls for radically reforming COCOM by the mid-1980s. First, the chapter briefly describes the various instruments of the U.S. export security apparatus, including COCOM, in order to show its range of controls, the role of the DOD, and the broad U.S. definition of military-sensitive technologies. Then, it analyzes the U.S. military-technological strategy of “competitive strategies” and its function as the unchanged foundation of U.S. COCOM policy. This is followed by a discussion of the declining effectiveness of U.S. export security controls in achieving their economic and political aims. The chapter then takes up the changes in the international economy which, together with U.S. modifications of its export security policy, eroded the ability of the United States to impose effective unilateral or multilateral restrictions within the postwar East-West anti-Communist framework. In this context, West European criticism of the U.S. approach to East-West trade is also discussed. Finally, the chapter contains several U.S. and West European recommendations for reforming COCOM. I conclude by suggesting that the United States should join with its European allies in a major revamping of U.S. export controls by replacing COCOM with cooperative structures set up collectively with East European reform regimes and the Soviet Union in order to promote technology transfer and at the same time forge common antiproliferation verification instruments to guarantee that transferred technology is not used for military purposes.

U.S. Executive and Legislative Export Controls

Restriction of Military Items

The Arms Export Control Act (AEC) of 1976 empowers the President to unilaterally restrict the production and export of defense goods and services.¹ The U.S. State Department implements the act through the International Traffic in Arms Regulations (ITAR) on the basis of the Munitions List, compiled by the Department of Defense.² Once items are placed on this list, an export license from the State Department becomes mandatory.³ The DOD, in its role as adviser to the State Department’s Office of Munitions Control (OMC), can also veto decisions concerning the twenty-two categories of items on the Munitions List.⁴

ITAR defines a defense article as any item specifically designated on the U.S. Munitions List. Armored vehicles, military aircraft, space electronics, and encoding devices are just a few examples of the classes of goods subject to trade restrictions. “Defense service” is defined by ITAR as “the furnishing of assistance, including training, to foreign persons in the design, engineering, development production, processing, manufacture, use, operation, overhaul, repair, maintenance, modification, or reconstruction of defense articles.”⁵ Category Eighteen covers the special domain of “technological data,” which includes information on the design, production, and reproduction of items on the Munitions List. The term “export” is very broadly defined and includes technical data in oral, visual, or written form. The AEC further specifies “export” to apply to data that leave the United States by post or other means of transport, to technical information made public by a U.S. citizen abroad (for example, at a conference or discussion), and even to technical data communicated in the United States to a foreign visitor.⁶ This covers, for example, cases in which information would be informally communicated to foreign students attending U.S. universities.⁷

Restriction of Dual-Use Items

A basic characteristic of U.S. export law is that the U.S. Export Administration Act (EAA) provides no right to export; it prohibits, with few exceptions, all exports from the United States, unless they are licensed by the Department of Commerce.⁸

The Export Administration Act of 1979, as subsequently amended in 1985, empowers the federal government to restrict the export of commercial goods and services for reasons pertaining to national security, foreign policy, and protection of the economy against export of scarce resources.⁹ The EAA’s definition of export goods also includes “technical data” and applies to dual-use technologies that can be used for civilian as well as military purposes. These are contained in the Commodity Control List (CCL) and the Military Critical Technologies List (MCTL), which are compiled by the DOD for the Commerce Department, the administrator of the EAA.¹⁰ In 1979, the MCTL became an important policy instrument and major source of transatlantic controversy stemming partly from the problems of interpreting and applying this highly complex statute.

The International Trade Administration of the Department of Commerce administers controls over exports, as well as over reexports of U.S.-origin commodities by U.S.-trading partners through two types of export licenses: general licenses for which no application is necessary, and individual validated licenses for the export of a specified quantity of goods for which formal approval must be authorized. The DOD’s influence in licensing activity is reflected in the fact that the number of DOD reviews of export licenses increased from 2,525 in 1980 to approximately five times that number in 1987.¹¹ The Export Administration Regulations (EAR) contain the U.S. control list, which specifies the characteristics of each commodity subject to control. The list contains 240 entries divided into ten categories: metalworking machinery; chemical and petroleum equipment; electrical and power-generating equipment; general industrial equipment; transportation equipment; electronics and precision equipment; metals, minerals, and their manufactures; chemicals, metalloids, and petroleum products; rubber and rubber products; and miscellaneous. The bulk of licensing activity concerns trade among Western nations. In 1987, over 100,000 validated licenses involving in excess of eighty billion dollars were processed.¹² This amounted to approximately 90 percent of West-West trade.

Particularly troublesome for foreign firms and governments has been the applicability of the EAA to foreign firms in the United States and abroad. The U.S. gas pipeline embargo against the Soviet Union announced by the Reagan administration in 1982 was based on the EAA’s extraterritorial authority. Foreign firms were prohibited from reexporting equipment containing U.S. technology not approved for reexport by the Commerce Department. As a result of reexporting rotary blades and technical data for the production of turbines and compressors in the Soviet Union, the firms AEG-Kanis of the Federal Republic of Germany, John Brown of Great Britain, Nuovo Pignone of Italy, and Dresser of France were prohibited by the U.S. government from receiving U.S. goods.¹³

An important legal characteristic of the U.S. export control apparatus is that the Export Administration Act of 1969 specifically exempted from judicial review penal decisions made against violators of the export regulations.¹⁴ While the Export Administration Act of 1979 modified this provision by allowing some review of penalties, the 1985 amendments gave the secretary of commerce final authority in such disputes. U.S. laws now provide for only limited judicial review of export regulations or individual licensing decisions. The Omnibus Trade and Competitiveness Act of 1988 modified previous legislation by introducing a limited form of judicial review.

The Coordinating Committee on Multilateral Export Controls (COCOM)

COCOM was created in 1949 as an economic extension of the U.S. policy of political and military containment of the Soviet Union. In the postwar era, direct U.S.-Soviet economic competition and cooperation have played an insignificant role, for the most part foreclosed by the East-West arms race, the formation of a bloc-against-bloc international system, and the autarkic character of the Soviet economy under Stalin. U.S. policy became centered on withholding advanced technology from the Soviet Union by means of U.S. unilateral controls, and multilaterally through COCOM (in which the United States is the dominant power). Adherence to COCOM restrictions was achieved by a combination of linking Marshall Plan aid to adherence to COCOM controls and, more generally, by the ability of the United States at that time to deny nations access to U.S. technology and markets if they violated U.S. strictures. The United States and its allies abandoned the wartime military strategy of maintaining the capability to outproduce potential adversaries in favor of relying both on superior military technology to offset the Warsaw Pact’s numerical advantage in troops and certain classes of weapons, and on withholding Western technology from the Soviet Union through an elaborate system of restrictive mechanisms.

COCOM, which is made up of Japan, Australia, and all NATO countries except Iceland, was formed for the purpose of controlling the flow of sensitive technology to the Soviet Union.¹⁵ The COCOM restrictions comprise three distinct lists. The International Munitions List and the International Atomic Energy List, covering military goods and atomic energy, are the least controversial among COCOM member states, which fully accept the principle of not exporting military goods to the Soviet Union and its Warsaw Pact allies. The International Industrial List contains industrial and dual-use goods, including turbines, machine tools, and electronic devices, such as aircraft radar and computers. This third list is, in turn, broken into three categories: goods whose export is prohibited (International List 1); goods whose export is limited in number (International List 2); and goods whose export is monitored and must be registered with COCOM (International List 3).¹⁶ The main sources of dispute between the United States and other COCOM member states traditionally have been the approximately ten different classes of goods on International List 1, which are also contained in the larger U.S. Commodity Control List.

Although the COCOM lists are classified, COCOM member states have their own export control lists that are more or less identical with important sections of the COCOM registries.¹⁷ With the growing criticism of COCOM in Western Europe, Japan, and Australia in the 1980s,¹⁸ there was greater public discussion of COCOM and diminishing adhere...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgments
• Introduction
• Contributors
• I. Historical Overview
• II. Economic Issues
• III. Export Controls and Technology Transfer
• Index