These controls reflect U.S. opposition to acts of international terrorism supported by foreign governments, as well as terrorist acts carried out by designated terrorist entities. Pursuant to Section 6(j) of the Export Administration Act (the Act), the Secretary of State has designated seven countries - Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria - as nations whose governments have repeatedly provided support for acts of international terrorism. As noted below, the Department of Commerce controls multilateral list items destined to military or other sensitive end-users in designated terrorist-supporting countries for anti-terrorism (AT) reasons under Section 6(j) of the Act. The Department of Commerce controls additional items on the Commerce Control List (CCL) to Cuba, Iran, Sudan, North Korea, Libya, Syria, and Iraq for AT reasons under the general authority of Section 6(a) of the Act. Additionally, comprehensive trade embargoes administered by the Department of the Treasury apply to Cuba, Iran, Iraq, Libya, and Sudan.
Broadly speaking, the Department of Commerce's Bureau of Industry and Security (BIS) has licensing responsibility for exports and reexports to Cuba, Syria, and North Korea, reexports to Libya, and reexports to Iran of EAR99 items (items subject to the Export Administration Regulations (EAR) but not specifically listed on the CCL). The Department of Commerce also has licensing responsibility for "deemed exports" - licensing the transfer of controlled technology to nationals of designated terrorist countries who reside in the United States. The Department of the Treasury has licensing responsibilities for exports to Iran, Iraq, and Libya, reexports of CCL items to Iran, and all reexports to Iraq. Both Departments maintain license requirements for exports and reexports to Sudan. This report does not describe the restrictions administered by The Department of the Treasury against Iran, Iraq, Libya, and Sudan.
On May 31, 2002, the Department of Commerce published a rule that revised certain controls and added certain new controls on chemical and biological items. Some of these revisions were based on actions taken at the Australia Group (AG) Plenary Meeting held in October 2001 and on decisions made subsequent to the Plenary. Anti-terrorism controls applicable to several AG and Chemical Weapons Convention (CWC) related entries on the CCL also were harmonized. In doing so, the Department of Commerce added a license requirement for AT reasons for exports and reexports to designated state sponsors of terrorism for: (i) chemicals controlled for chemical and biological weapons reasons, (ii) test kits containing such chemicals, and (iii) mixtures containing more than trace amounts of these chemicals, unless the mixture is one in which the controlled chemicals are normal ingredients in consumer goods packaged for retail sale. The effect of these controls, which harmonized AT controls to all designated terrorist countries, included: (i) imposing AT controls on Export Commodity Control Number (ECCN) 1C350 for Iraq; (ii) imposing AT controls on chemicals and mixtures controlled under ECCN 1C355; (iii) expanding AT controls for mixtures controlled under ECCN 1C995 to include Iraq, Sudan, and Syria; and (iv) imposing AT controls on test kits controlled under ECCN 1C995 to Iraq. This harmonization of AT controls, and certain revisions made as a result of the AG 2001 Plenary and subsequent meetings as described in Chapters 6 and 7 of this document, were described in detail in a report to Congress on May 29, 2002.
In addition to the discussion of controls on exports and reexports to countries that support international terrorism, this chapter describes controls on exports and certain reexports to Specially Designated Terrorists (SDTs) and Foreign Terrorist Organizations (FTOs).
The Secretary of State has determined that the following are countries whose governments have repeatedly provided support for acts of international terrorism: Libya (1979), Syria (1979), Cuba (1982), Iran (1984), North Korea (1988), Iraq (1990), and Sudan (1993). Effective December 28, 1993, the Acting Secretary of State determined that the United States would control five categories of dual-use items subject to multilateral controls to certain sensitive government end-users under Section 6(j) of the Act, since these items meet the criteria set forth in Section 6(j)(1)(B). Specifically, the Acting Secretary determined that these items, when exported to military, police, or intelligence organizations, or to other sensitive end-users in a designated terrorist-supporting country, could make a significant contribution to that country's military potential or could enhance its ability to support acts of international terrorism. As a result, any such export is subject to a 30-day Congressional notification period prior to approval. These AT controls apply to all designated terrorist-supporting countries.
The Acting Secretary also advised that the United States should continue to control other items not specifically controlled under Section 6(j) for general foreign policy purposes under Section 6(a) to terrorist-supporting countries, and that the United States should continue to review the export of such items prior to approval to evaluate whether, under the circumstances of the application, the requirements of Section 6(j) are to apply. These measures are described below.
Paragraph A reflects the Section 6(j) AT controls that apply to all seven designated terrorist countries. Paragraph B reflects the Section 6(a) AT controls on Iran, Sudan, Syria, and North Korea. Paragraphs C, D, and E reflect the additional AT controls that apply to Iran, Sudan, and North Korea. Paragraph F reflects the Section 6(a) AT controls that apply to Iraq. Cuba and Libya are subject to comprehensive export controls under the EAR. Consequently, all items controlled for AT reasons on the CCL require a license for export to these two countries. Sudan (as of November 4, 1997), Iran (as of May 7, 1995), and Iraq (as of August 2, 1990) are subject to comprehensive trade and investment embargoes administered by the Department of the Treasury under the authority vested in the President under the International Emergency Economic Powers Act (IEEPA). The Department of Commerce refers for Department of State review license applications for items controlled under Section 6(a) of the Act before approval to determine whether the requirements of Section 6(j) apply. If the Secretary of State determines that the particular export "could make a significant contribution to the military potential of such country, including its military logistics capability, or could enhance the ability of such country to support acts of international terrorism," the Department of Commerce and the Department of State will notify the appropriate Congressional committees 30 days before issuing a license, consistent with the provisions of Section 6(j) of the Act.
A. Pursuant to Section 6(j) of the Act, the Department of Commerce requires a license for the export of the following items to military or other sensitive end-users in designated terrorist-supporting countries:
B. The categories of items controlled under Section 6(a) include, but are not limited to:
C. Exports of the following additional items to Iran, Sudan, and North Korea are subject to a license requirement under Section 6(a) of the Act for foreign policy reasons: Large diesel engines (>400 horse power), scuba gear, and pressurized aircraft breathing equipment.
D. Export of the following additional items to Iran and North Korea are subject to a license requirement under Section 6(a) of the Act for foreign policy reasons: Portable electric power generators.
E. Exports of the following additional items to North Korea are subject to a license requirement under Section 6(a) of the Act for foreign policy reasons:
F. Exports of the following items to Iraq are subject to a license requirement under Section 6(a)
of the Act for foreign policy reasons: Chemicals and mixtures controlled under 1C350, CWC Schedule 2 and 3 chemicals controlled under 1C355, and mixtures and test kits controlled under 1C995.
License Requirements and Licensing Policy for Cuba
Cuba is subject to comprehensive export and reexport controls. In addition to license requirements for AT controlled items on the CCL, the Department of Commerce requires a license for items classified as EAR99 (items not on the CCL, but subject to the EAR). As a result, the Department of Commerce requires a license for export or reexport to Cuba of virtually all commodities, technology, and software, except:
The U.S. Government generally denies license applications for exports or reexports to Cuba. However, the Department of Commerce will consider applications for the following on a case-by-case basis:
The Department of Commerce reviews applications for exports of donated and commercially supplied medicine or medical items to Cuba on a case-by-case basis and pursuant to the provisions of section 6004(c) of the Cuban Democracy Act of 1992. The United States does not restrict exports of these items, except in the following cases:
The Department of Commerce authorizes the use of License Exception Agricultural Commodities (AGR) for U.S. exports and certain reexports of agricultural commodities to Cuba. Section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (Title IX of Pub. L. 106-387), as amended (TSRA), requires the expedited review of proposed exports of agricultural commodities to Cuba. Under License Exception AGR, an exporter must submit prior notification of a proposed transaction to the Department of Commerce. The exporter may proceed with the shipment when the Department confirms that no reviewing agency has raised an objection (generally within 12 business days), provided the transaction meets all of the other requirements of the license exception. This expedited review includes the screening of the ultimate recipient of the commodities to ensure that it is not involved in promoting international terrorism. Exports of medicines and medical devices to Cuba are not eligible for License Exception AGR and continue to be subject to the license application and review requirements of Section 6004(c) of the Cuban Democracy Act of 1992.
All items on the CCL require a license to North Korea. The U.S. Government has a general policy of denial for strategic, nuclear, missile, chemical, biological, and other sensitive items on the CCL to all end-users. In addition, there is a policy of denial for other items on the CCL to military end-users or end-uses, and items with potential nuclear applicability to nuclear end-users or end-uses. Certain items on the CCL may be licensed to civilian end-users or end-uses on a case-by-case basis. Items not on the CCL may be exported to North Korea without a license, unless the end-user is involved in weapons proliferation activities, in which case, provisions of the Enhanced Proliferation Control Initiative "catch-all" control would apply.
The Department of Commerce is responsible for licensing reexports to Libya of U.S.-origin items subject to the EAR. A license is required for all such reexports, except:
The Department of Commerce will generally deny applications for reexport of the following:
The Department of Commerce will consider exceptions to this denial policy on a case-by-case basis for the following:
All other reexports, with the exception of humanitarian items and medical equipment as defined in the TSRA, will generally be denied.
License Requirements and Licensing Policy for Sudan
The U.S. Government has a general policy of denial for the export and reexport of all items controlled for chemical, biological, missile and nuclear proliferation reasons, military-related items controlled for national security reasons (CCL entries ending in the number 18), and certain items controlled for national security or foreign policy reasons, such as aircraft, cryptologic items, and explosive device detectors, for all end-users in Sudan. Other items controlled to Sudan for national security or foreign policy reasons are subject to a policy of denial for military end-users or end-uses and are reviewed on a case-by-case basis for non-military end-users or end-uses. Pursuant to Executive Order 13067 of November 3, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Sudan. When a proposed export or reexport involves an item on the CCL requiring a license from both the Department of Treasury and the Department of Commerce, the Department of Commerce will only review a license application if the Department of the Treasury has previously approved the export or reexport. The Department of the Treasury is responsible solely for licensing the export of agricultural and medical items not listed on the CCL to Sudan under the provisions of the TSRA.
The U.S. Government has a general policy of denial for exports and reexports of items controlled for nuclear, chemical, biological, and missile proliferation reasons; military-related items controlled for national security reasons (CCL entries ending in the number 18); and certain other national security or foreign policy controlled items, such as aircraft, cryptologic items, and explosive device detectors, to all end-users in Syria. The Department of Commerce reviews other national security and foreign policy controlled items under a policy of denial to military end-users and end-uses and on a case-by-case basis to non-military end-users and end-uses.
The Department of Commerce will consider applications for export and reexport to Syria on a case-by-case basis if they meet the following conditions:
. The transaction involves the reexport to Syria of items where Syria was not the intended ultimate destination at the time of original export from the United States, provided that the export from the United States occurred prior to the applicable contract sanctity date.
. The U.S. content value of foreign-produced commodities is 20 percent or less.
. The commodities are medical equipment.
. The commodities are aircraft equipment necessary to maintain the safety of civil aviation and the safe operation of commercial passenger aircraft.
Applicants wishing to have contract sanctity considered in reviewing their applications must submit adequate documentation demonstrating the existence of a contract that predates the imposition or expansion of controls on the item(s) intended for export.
The U.S. Government has a general policy of denial for all items controlled for chemical, biological, missile and nuclear proliferation reasons; military-related items controlled for national security reasons (CCL entries ending in the number 18); and all other items controlled for national security or foreign policy reasons, for all end-users in Iran. Pursuant to Executive Order 12959 of May 6, 1995, and Executive Order 13059 of August 19, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports of CCL items to Iran and is responsible for licensing: (1) exports from the United States to Iran; (2) exports and reexports by U.S. persons to Iran, including agricultural and medical items classified as EAR99 (items not on the CCL) to Iran under the provisions of the TSRA; and (3) reexports of CCL items by any person to Iran. The Department of Commerce has licensing responsibility for reexports of EAR99 items to Iran by non-U.S. persons.
The U.S. Government has a general policy of denial for all items controlled for chemical, biological, missile and nuclear proliferation reasons; military-related items controlled for national security reasons (CCL entries ending in the number 18); and all other items controlled for national security or certain foreign policy reasons for all end-users in Iraq. Pursuant to Executive Order 12722 of August 2, 1990 and Executive Order 12724 of August 9, 1990, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Iraq and is responsible for licensing: (1) exports from the United States to Iraq; (2) exports by U.S. persons to Iraq; and (3) reexports of U.S.-origin items to Iraq. Part of the Department of the Treasury's licensing responsibilities include exports and reexports of U.S.-origin items by U.S. persons who have obtained U.N. authorization to engage in trade with Iraq under the auspices of the U.N. Oil-for-Food program.
The Department of Commerce requires a license for the export from the United States or by U.S. persons of all items subject to the EAR to SDTs and FTOs. The Department of Commerce also requires a license for the reexport by non-U.S. persons of items on the CCL to such SDTs or FTOs and a general policy of denial applies to such applications. SDTs and FTOs are identified on a list of designated persons maintained by the Department of the Treasury in Appendix A to 31 CFR Chapter V.
Anti-terrorism controls are intended to prevent acts of terrorism and to distance the United States from nations that have repeatedly supported acts of international terrorism and from individuals and organizations that commit terrorist acts. The controls demonstrate U.S. resolve not to trade with nations or entities that fail to adhere to acceptable norms of international behavior. The policy provides the United States with the means to control any U.S. goods or services that might contribute to the military potential of designated countries and to limit the availability of such goods for use in support of international terrorism. U.S. foreign policy objectives also are furthered by ensuring that items removed from multilateral regime lists continue to be controlled for AT reasons and applied consistently to all exports involving terrorist-supporting countries.
The United States imposed an embargo four decades ago because Cuban actions posed a serious threat to the stability of the Western Hemisphere and the Cuban Government expropriated property of U.S. citizens without compensation. In March 1982, as a result of Cuba's support for insurgent groups that engaged in terrorism, the Secretary of State designated it as a state sponsor of terrorism under Section 6(j) of the Act.
Under the U.S.-North Korea signed 1994 Agreed Framework, North Korea agreed to stop its nuclear program in exchange for oil shipments and the construction of two reactors that are difficult to use for military purposes. In December 2002, the United States, along with South Korea and other countries, suspended oil shipments to North Korea after discovering that North Korea failed to comply with its commitments under the Agreed Framework, the Nuclear Nonproliferation Treaty, North Korea's safeguards agreement with International Atomic Energy Agency, and the Joint North-South Declaration on the Denuclearization of the Korean Peninsula by pursuing an enriched uranium nuclear program. In addition, although there has been a bilateral dialogue on terrorism with North Korea, AT controls remain in effect because of unresolved issues concerning North Korea's continuing support of international terrorism, including, but not limited to, harboring members of the Japanese Red Army Faction. Also of continuing concern is the abduction of Japanese individuals by North Korean intelligence services during the 1980s and 1990s, recently acknowledged by the North Korean Government. The purpose of the controls is to restrict the import of equipment useful in enhancing the military or terrorist-supporting capabilities of the regime and addressing other U.S. foreign policy concerns, including non-proliferation, human rights, and regional stability.
The purpose of the controls is to demonstrate U.S. opposition to, and to distance the United States from, Libya's intervention in the affairs of neighboring states and support for acts of international terrorism and international subversive activities. According to the State Department's 2001 Global Patterns of Terrorism report, Libya appears to have curtailed its support for international terrorism, although it may maintain residual contacts with a few groups. Libya also has yet to satisfy the UNSC requirements related to the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, and, therefore, remains under U.N. sanctions (albeit suspended). Beyond terrorism concerns, Libya continues to pursue the development of weapons of mass destruction (WMD) and missile delivery systems. U.S. unilateral sanctions, in place since 1986, broadly prohibit U.S. persons from engaging in unauthorized financial transactions involving Libya. Meanwhile, the U.S. Government's policy of support for exports and reexports of food, medicines, and medical equipment ensures that the Libyan population has access to items necessary for basic human needs.
Evidence indicates that Sudan allows the use of its territory as a sanctuary for terrorist organizations, including Hamas and the Palestinian Islamic Jihad. The embargo and export controls demonstrate U.S. opposition to Sudan's support for international terrorism and restrict access to items that could make a significant contribution to Sudan's military capability and ability to support international terrorism. The United States has continuing concern about Sudan's support for international terrorism; the premeditated blocking of humanitarian assistance to those in need; calculated attacks against civilians by Sudanese armed forces; and the prevalence of human rights violations, including slavery and the denial of religious freedom. Sudan must take substantive steps towards improvement in these areas before the United States will consider establishing normal relations or modifying U.S. export controls. Based on U.S.-Sudanese dialogue that began in September 2001, the U.S. Government's authorization of exports of food, medicine, and medical equipment ensures that the Sudanese population does not suffer unduly in terms of basic human needs as a result of U.S. export controls.
Although there has been no evidence directly implicating the Syrian Government in the planning or implementation of terrorist acts since 1986, Syria continues to provide sanctuary and support to groups engaging in terrorism. (3) Additionally, Syria consistently violates the U.N. embargo against Iraq by, among other things, allowing the use of its pipelines to transport illegal Iraqi oil, as well as the use of its airspace by planes illegally traveling in and out of Iraq. U.S. export controls reflect U.S. opposition to Syria's support of terrorist groups, prevent a U.S. contribution to Syria's military capabilities and ability to support international terrorism. The controls also promote other U.S. foreign policy interests, including human rights and regional stability.
The purpose of the controls is to restrict exports of items that would be useful in enhancing Iran's military or terrorist-supporting capabilities and to address other U.S. foreign policy concerns, including non-proliferation, human rights, and regional stability. Such controls remain in place due to Iran's continued support to terrorist groups, including those seeking to disrupt the Middle East peace negotiations, and allow the United States to prevent shipments of U.S.-origin items to Iran for uses that could threaten to U.S. interests. By restricting items with military use, the controls demonstrate the resolve of the United States not to provide any direct or indirect military support for Iran and to support other U.S. foreign policy objectives. The United States' support for exports and reexports of food items, medical supplies, and medical equipment adds an additional facet to the bilateral dialogue and ensures that the Iranian population receives what it needs for humanitarian purposes.
The U.S. Government maintains comprehensive controls on exports and reexports to Iraq in support of the UNSC sanctions maintained on Iraq since Iraq's invasion of Kuwait in 1990. The U.N. sanctions regime was modified in 1996 with the creation of the Oil-for-Food program, which allows Iraq to export oil and use the proceeds from its oil sales, controlled in an escrow account by the U.N., to purchase such items as food and medicine, and items for electricity, water/sanitation, agriculture, education, oil production, settlement rehabilitation, and de-mining. U.N. authorization is required before Iraq may purchase these items. After U.N. authorization is obtained, the U.S. Government also requires a license for the export or reexport of U.S.-origin items. The Department of the Treasury has licensing responsibility for such exports and reexports.
UNSC Resolution 1409, of May 14, 2002, changed the Oil-for-Food program to adopt a list of items that would require closer scrutiny before U.N. authorization. The result of this requirement was new U.N. authorization procedures based on a Goods Review List (GRL). The GRL is based on a list of items that the United Nations will continue to scrutinize closely. Non-listed items are eligible for expedited U.N. approval. Although this UNSC action expands what is eligible for export to Iraq, the U.S. Government has not eased its licensing requirements for on Iraq. In May 2002, the Department of Commerce imposed anti-terrorism controls under the EAR on certain chemicals, chemical mixtures, CWC scheduled chemicals, and test kits over continued concerns about Iraq's possible use of chemical or biological weapons, thus bolstering U.S. Government controls on such items.
The purpose of the unilateral controls on the export or reexport of items subject to the EAR to SDTs and FTOs. These controls also further the general policy of the United States to prevent supporters of terrorism and terrorist elements from acquiring technology that might enhance terrorist capabilities. The controls enable the Department of Commerce to use its licensing and enforcement resources to support U.S. counterterrorism efforts by monitoring and investigating unlicensed exports, reexports, and diversion of items subject to the EAR to parties designated as terrorists by the U.S. Government.
1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary has determined that these controls are likely to achieve the intended foreign policy purpose. Although widespread availability of comparable goods from foreign sources limits the effectiveness of these controls, the controls do restrict access by these countries and persons to U.S.-origin commodities, technology, and software, and demonstrate the U.S. determination to oppose and distance itself from international terrorism.
The United States maintains an embargo and AT controls against Cuba to express U.S. opposition to the continued repressive policies of the Castro government. The United States has modified the embargo on numerous occasions to aid the Cuban people in bringing about a transition to democracy and a free market economy and to expand humanitarian assistance to the Cuban people.
The controls deny the North Korean Government most commodities, technology, and software controlled on the CCL to prevent the government from supporting acts of international terrorism or expanding its proliferation activities. Exports to North Korea have traditionally been humanitarian in nature, consisting of food, medicine, and medical equipment.
The United States maintains export and reexport prohibitions for commodities controlled for national security reasons, for certain types of oil terminal and refining equipment, for items used to service or maintain Libyan aircraft and airfields, and for all other items subject to the EAR, with few exceptions. The intent of these restrictions is to prevent U.S. contributions to Libya's involvement in activities detrimental to the U.S. national security and foreign policy interests. The controls send a clear signal that despite the resumption of trade between Libya and the European Union, the United States is unwilling to resume normal trade relations until Libya's behavior improves.
The controls on Sudan affirm the commitment of the United States to oppose international terrorism by limiting Sudan's ability to obtain and use U.S.-origin items in support of terrorist or military activities. These controls send a clear message to Sudan of strong U.S. opposition to its support for terrorist groups.
These controls are an important means of demonstrating U.S. resolve to limit Syria's ability to obtain U.S.-origin items that could be used to support terrorist activities or contribute significantly to Syria's military potential. Although other nations produce many of the items subject to U.S. anti-terrorism controls, this fact does not eliminate the need to send a strong signal to the Syrian Government of U.S. disapproval of its support for terrorist groups and defiance of the U.N. embargo against Iraq.
The controls on Iran restrict its access to specified U.S.-origin items that could be used to threaten U.S. interests. The United States has sought, and will continue to seek, the cooperation of other countries in cutting off the flow of military and military-related equipment to Iran.
The U.S. Government's controls on Iraq reflect its commitment to the UNSC sanctions regime on Iraq. During FY 2002, the UNSC revised its procedures, resulting in a broadening of the items eligible to be exported to Iraq under the Oil-for-Food program. The U.S. Government has not eased unilateral controls, and has added anti-terrorism controls under the EAR on certain chemicals, chemical mixtures, CWC scheduled chemicals, and test kits based on continued concerns about Iraq's possible use of chemical or biological weapons.
Controls on exports and reexports to SDTs and FTOs are intended to prevent acts of terrorism and to affirm U.S. opposition to international terrorism by limiting the ability of designated terrorist organizations and individuals to obtain and use U.S.-origin items in terrorist operations.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives. They also are compatible with overall U.S. policy toward Iran, Sudan, Cuba, North Korea, Libya, Syria, Iraq, and terrorist groups and organizations. The controls to designated terrorist groups and individuals, wherever located, affirms U.S. commitment to restrict the flow of items and other forms of material support to countries, individuals, or groups for terrorist purposes.
Although most countries recognize the right of the United States to determine its own foreign policy and security concerns, many countries, particularly Canada, Mexico and the members of the European Union, opposed the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms-Burton) and continue to oppose unilateral U.S. controls on Cuba.
The United States maintained a comprehensive trade embargo against North Korea for 50 years. In general, the U.S. allies have largely acted in concert with the United States to deny North Korea strategic equipment and technology. The easing of U.S. sanctions toward North Korea and the removal of some U.S. controls in June 2000 were echoed by other western countries. U.S. allies will likely follow the United States' lead and not go beyond the scope of U.S. commitments until North Korea places further limits on its weapons proliferation and military activities. In December 2002, the United States, along with South Korea and other countries, suspended oil shipments to North Korea after discovering that North Korea failed to comply with its commitments under the Agreed Framework, the Nuclear Nonproliferation Treaty, North Korea's safeguards agreement with the International Atomic Energy Agency, and the Joint North-South Declaration on the Denuclearization of the Korean Peninsula by pursuing an enriched uranium program.
Many countries believe that in turning over the two Libyan nationals for trial, Libya fulfilled its obligations to the United Nations in regard to the Pan Am 103 bombing. The United Nations suspended its sanctions against Libya in April 1999. Most countries did not support the U.S. renewal of the Iran-Libya Sanctions Act in 2001 and would like to see the United States remove the sanctions maintained under the IEEPA on items including aircraft parts and components and oil well equipment. The United States has sought and will continue to seek the support of other countries in cutting off the flow of sensitive items to Libya.
The United States imposed the controls (and subsequent embargo) in response to credible evidence that Sudan assists international terrorist groups, destabilizes neighboring governments, and violates human rights. The United States continues to consult with key allies and urges them to take all possible measures to convince Sudan to halt its support of terrorism.
The United States maintains controls in response to Syria's lack of concrete steps to end support for the terrorist groups that maintain a presence in Syria and Syrian-controlled areas of Lebanon. Although other countries concur that Syria's regional activities are destabilizing, few countries maintain controls similar to those implemented by the United States.
Regarding the controls on specific product categories, other countries share the U.S. concern over Iran's support of terrorism, human rights abuses, and attempts to acquire WMD. For instance, the Wassenaar Arrangement has recognized Iran as a country whose behavior is a cause of concern. In general, however, U.S. controls on commercial goods to Iran are more stringent than those of other countries. Iran's trade partners include Germany, Japan, the United Kingdom, and many other nations.
The U.S. Government maintains controls as part of its commitment to the UNSC sanctions regime on that country, which remains in place as long as there are concerns that Iraq has WMD. The United States is closely engaged with the United Nations and with key allies to ensure that Iraq halts its WMD program and destroys existing weapons in its possession. The U.S. Government's lead on this issue has resulted in Iraq allowing U.N. inspection teams into Iraq for the first time in four years. The U.S. Government was unanimously supported on this issue by the members of the UNSC. During FY 2002, the Department of Commerce imposed AT controls under the EAR on certain chemicals, chemical mixtures, CWC scheduled chemicals, and test kits over continued concerns about Iraq's possible use of chemical or biological weapons.
Many countries support U.S. efforts to fight terrorism through blocking designated terrorist groups and individuals from acquiring commodities that could assist said groups in committing future acts of violence. While some countries are considering restrictive legislation, very few maintain export controls similar to those implemented by the United States.
4. Economic Impact on United States Industry. The Secretary has determined that the adverse effect of these controls on the economy of the United States, including on the competitive position of the United States in the international economy, does not exceed the benefit to United States foreign policy objectives. As noted by the export licensing and general trade information presented below, the controls maintained on designated terrorist countries as a whole have had an impact on U.S. industry. This is because most CCL items are controlled for AT reasons and the licensing policy is often one of denial. In addition, a number of these countries also are subject to a comprehensive embargo (Cuba, Libya, Iran, Sudan, and Iraq). The figures below, therefore, include licensing statistics for certain non-AT controlled items such as foodstuffs and medical supplies.
The U.S. Government requires a license for the export and reexport of all U.S.-origin commodities, technology, and software subject to the EAR to Cuba. In recent years, the number of license applications that the Department of Commerce approved to Cuba has increased significantly. This increase in approved export license applications to Cuba can be attributed to changes made during the late 1990s in U.S. export policies, including the resumption of direct flights, exports of medicines and medical supplies and equipment, exports of food and certain agricultural commodities for sale to independent non-government entities, and the expansion of agricultural commodities eligible for export authorization under the procedures specified in License Exception AGR. License Exception AGR was created in 2001 to implement the licensing requirements for exports of agricultural commodities to Cuba under TSRA.
In FY 2002, the Department of Commerce approved 389 license applications valued at over $1 billion for Cuba. This is a substantial increase over FY 2001, when the Department approved 240 applications valued at $452 million. In 2002, the Department denied three license applications (valued at $50.2 million) and returned without action (RWA'd) 64 license applications (valued at $571 million). The high number of RWA's is attributed largely to exporters submitting license applications for agricultural commodities when, in fact, they were eligible to submit notifications to use License Exception AGR. In FY 2002, the Department authorized 193 notifications valued at $927 million under License Exception AGR. The Department of Commerce and reviewing agencies had no objections to these notifications, which would have converted the notification into a license application. Eleven notifications (valued at $10.8 million) were RWA'd because the products were not eligible for export under License Exception AGR.
Number of Applications / Notifications
Total Value in U.S. Dollars
* Includes both license applications and notifications under License Exception AGR.
The majority of export licenses approved for Cuba in FY 2002 (326 of the 389 cases) were for EAR99 items, including medicines and medical supplies, instruments, equipment, and gift parcels. Licenses for aircraft and ocean vessels on temporary sojourn accounted for 67 cases.
The U.S. embargo on Cuba is unilateral. According to the CIA's World Factbook 2001, Cuba imported $3.4 billion in commodities in 2000. Leading imports were petroleum, foodstuffs, machinery, and chemicals, and leading suppliers were Spain, Venezuela, and Canada. In general, southern Florida (particularly the port area of Tampa) and exporters that would benefit from the cost advantages of U.S. proximity to Cuba are most affected by the trade embargo.
U.S. export sanctions on North Korea have had a minimal impact on U.S. industry. North Korea's total imports average about $1-2 billion per year, with the primary imports including petroleum, grain, coking coal, machinery and equipment, and consumer goods. According to the Korea Trade Promotion Corporation, North Korea's five major trading partners are China, Japan, Russia, South Korea, and Germany, which account for more than 60 percent of North Korea's total trade. The CIA estimates that North Korean imports totaled $1.69 billion in 2000.
Based on U.S. Census Bureau statistics, total U.S. exports to North Korea, although far below the levels of other countries, have generally increased since the signing of the U.S.-North Korea Agreed Framework in October 1994. Exports rose from only $179,730 in 1994 to between $3 and $4 million annually from 1995 through 1998. In 1999, U.S. exports to North Korea nearly tripled to $11.3 million. However, in 2000 U.S. exports dropped to $2.7 million and in 2001 U.S. exports were only $700,000, the vast majority of which were charity shipments. In the first seven months of 2002, however, U.S. exports to North Korea totaled $13.1 million.
Export license applications approved by the U.S. Government for North Korea increased from six licenses (valued at $66,443) in FY 1994 to an annual average of 40 licenses, valued at over $1.5 billion through FY 1999 (see Table 2). However, since FY 2000, the Department has approved only a handful of licenses per year. In FY 2002, the Department approved 9 license applications for North Korea valued at $2.9 million, with no applications denied and 17 (valued at $38.8 million) RWA'd.
On September 17, 1999, President Clinton announced his decision to ease some of the sanctions maintained against North Korea. The sanctions easing was implemented in June 2000, making most U.S. consumer goods eligible for export without a license to North Korea. This may account for the decline in license applications for North Korea since FY 2000, as the majority of the humanitarian and low-level consumer items formerly requiring a license may now be shipped without a license.
Number of Applications
Total Value in U.S. Dollars
According to Census Bureau statistics, U.S. exports to Libya in calendar year 2001 totaled
$9.0 million, mostly consisting of wheat; data for the first seven months of 2002 show that U.S. exports to Libya increased to $18 million. However, this accounts for a negligible percentage of Libya's total imports of $7.6 billion in 2000, according to the CIA's World Factbook. Libya's major suppliers include Italy (24 percent), Germany (12 percent), Tunisia (9 percent), the U.K. (7 percent), France (6 percent), and South Korea (5 percent). Libya's major imports were machinery, transport equipment, food, and manufactured goods.
U.S. exports to Libya have declined steadily since 1979 when U.S. export controls were first expanded. Since then, the United States has authorized exports to fulfill pre-1982 contractual obligations and humanitarian aid. Annual U.S. exports and reexports to Libya fell from $860 million in 1979 to less than $1 million annually from 1987 through 1994. Total U.S. exports to Libya have been minimal since then, with occasional shipments of cereals. In FY 2002, the Department of Commerce issued six reexport licenses valued at $20,253,594, including licenses for medical equipment and parts for repair/maintenance of aircraft. The Department also RWA'd 3 applications (valued at $6,1 million) in FY 2002 and no applications were rejected.
U.S. unilateral export sanctions on Sudan have had a minor affect on U.S. industry. Sudan's poor economic performance over the past decade prevents the country from importing a significant amount of goods from any supplier, including the United States. Before the U.S. embargo went into effect on November 4, 1997, the small amount that Sudan imported from the United States generally did not require an export license and, thus, was not affected by the export controls. According to Census Bureau statistics, U.S. exports to Sudan in calendar year 2001 totaled $17.1 million - mostly wheat, cereals, and vegetable oils. The CIA estimates that Sudan's total imports from all sources were $1.2 billion in 2000; leading suppliers were China, Libya, Saudi Arabia, the United Kingdom, and France. Leading imports were foodstuffs, manufactured goods, machinery and transport equipment, and medicines.
The U.S. aerospace industry appears to have been the most affected by the AT controls on Sudan. Aircraft exports from the United States to Sudan totaled more than $6.4 million in 1992, but no such exports have been reported since 1994. Exports of aircraft engines and aircraft engine parts show a similar decline, falling from $845,142 in 1992 to barely $10,000 in 1997. By 1998, U.S. aerospace exports to Sudan had fallen to virtually zero.
The number of U.S. export licenses issued for Sudan was negligible before the sanctions were implemented, since low-level technology items (which did not require export licenses) constituted the bulk of U.S. exports. After sanctions were imposed, the Treasury Department assumed licensing responsibility for Sudan. Since then, the Department of Commerce has only processed license applications with Sudanese end-users when the application is for a "deemed export." There were no license applications approved or rejected for Sudan in FY 2002 and three were returned without action, with instructions for the exporter to contact the Department of the Treasury.
Total Applications Approved
| Total Value
(in U.S. dollars)
U.S. controls have had minimal impact on industry because the U.S. Government does not require a license for most items for Syria's leading import sectors, including agricultural items and EAR99 products for the petroleum industry. Despite setbacks to the Syrian economy in recent years, the economic reforms and infrastructure improvements undertaken by the government in the early 1990s, while limited, have enhanced the country's potential as a market for U.S. exports.
From 1992-2001, the volume of U.S. exports to Syria has been relatively stable, falling within the range of $161 million and $226 million per year. In calendar year 2001, U.S. exports totaled $224.7 million. Cereals, mostly corn, accounted for about a quarter of U.S. exports, as did various types of machinery (e.g., parts for bulldozers and internal combustion engines). Other leading exports included tobacco and pharmaceuticals.
The average annual value of export licenses issued by the U.S. Government for Syria has increased in the last ten years. In FY 1991, the U.S. Government approved eight licenses with a total value of $1.04 million. However, since 1994, the value of licensed trade has risen to an average of about $100 million per year. In FY 2002, the Department of Commerce approved 95 license applications for Syria with a value of $108.1 million. The majority of licensed items for the period covered by the table below consists of aircraft parts and components, digital computers, and certain electronic devices and telecommunications equipment controlled for foreign policy reasons only. The U.S. Government denied eight applications valued at $571,161 in FY 2002, bringing the total number of applications denied for Syria since FY 1991 to 83 applications with a total value of $33.4 million.
Total Applications Approved
(in U.S. dollars)
The U.S. policy of case-by-case review for aircraft parts and components and aircraft engine parts and components for air safety has led to an increase in aerospace exports to Syria. From 1991-98, exports of aircraft engine parts to Syria totaled $3.1 million (slightly more than 17.4 percent of total U.S. aerospace exports to Syria during this period) and exports of avionics equipment totaled only $355,596 (just 1.9 percent of total U.S. aerospace exports to Syria). In calendar year 2001, total U.S. aerospace exports to Syria equaled $1.4 million, all of which was for aircraft parts and components. U.S. policy not to approve the sale of new aircraft to Syria has resulted in a gradual shift from the export of aircraft parts and components for U.S.-origin planes to the export of U.S. parts for non-U.S.-origin planes. Although Syrian Arab Airlines (SAA) operates several Boeing aircraft, which require large amounts of spare parts to operate safely, SAA recently purchased six Airbus aircraft. Many of the components currently required by SAA for use on the Boeing aircraft are provided by U.S. exporters. U.S. exporters are also providing parts and components for the Airbus aircraft, albeit at lower levels.
U.S. information technology firms also are increasingly affected by export controls on Syria. The technology level at which export licenses are required has not changed in recent years, despite rapid technological advancements. This has the effect of controlling even very low-level items. For example, the control level for computer exports to Syria stands at 6 million theoretical operations per second.
The U.S. Government maintains a policy of denial of license applications for dual-use exports to Iran, consistent with the provisions of the Iran-Iraq Arms Non-Proliferation Act of 1992, contained in the National Defense Authorization Act of FY 1993 (NDAA), and the U.S. trade and investment embargo of 1995. Prior to the 1993 NDAA and the imposition of the embargo, U.S. exports to Iran had risen sharply in the early 1990s in response to Iran's removal of certain import restrictions. From 1991 through 1994, U.S. exports to Iran totaled close to $2.2 billion, making the United States the sixth-largest exporter to Iran during this period. Such exports, however, amounted to only 5 percent of Iran's total imports and less than 1 percent of overall U.S. exports.
As a result of the denial policy mandated by FY 1993 NDAA and the 1995 U.S. trade and investment embargo, U.S. exports to Iran have fallen dramatically. In 1999, the United States exported $48.1 million to Iran, virtually all in the form of cereals. In 2000, exports fell further to $16.6 million - again, almost all cereal. In 2001, the U.S. exports to Iran were valued $8.1 million, including medical items and foodstuffs.
Since 1997, the Department of Commerce only has approved applications for "deemed exports" (transfers of controlled U.S. technology to Iranian nationals legally working in the United States), rather than actual exports. In FY 2002, the Department of Commerce approved 10 deemed export licenses for Iranian nationals. In contrast, during the four fiscal years prior to FY 1995 (FY 1991-94), the Department of Commerce approved an average of $177 million in applications to Iran each year. Table 5 shows the impact of the 1993 NDAA and the trade embargo on U.S. trade with Iran:
Number of Applications
Total Value in U.S. Dollars
The U.S. trade and investment embargo radically transformed the composition of U.S. trade with Iran. Since 1996, the first full year of the embargo, top U.S. exports to Iran have been completely different than in previous years. In calendar year 2002, U.S. exports were mainly cereals and other foodstuffs, with pharmaceutical products, such as blood antisera, and printed materials making up the remainder. As Table 6 demonstrates, the agricultural, aerospace, and oil industries have been among those most directly affected by the embargo. From 1991 through 1994, U.S. exports of aircraft engine parts to Iran totaled nearly $9.4 million, averaging
$2.3 million per year and peaking at more than $7.5 million in 1994. By 1996, aerospace exports declined to virtually zero.
Prior to the embargo, the United States competed with Iran's major trading partners in exports of industrial machinery, motor vehicles and auto parts, power generating machinery, measuring and controlling devices, computers, plastics and resins, and industrial organic chemicals. In 2000, Iran imported a total of $50 billion in goods and its leading trade partners were Germany, South Korea, Italy, the United Arab Emirates, France, and Japan.
Description of Goods
|3511||Turbines & turbine generator sets||$322.5 million|
|3531||Construction machinery & parts||$307.8 million|
|3533||Oil & gas field equipment||$250.1 million|
|2044||Milled rice & by-products||$166.3 million|
|2873||Nitrogenous fertilizers||$124.2 million|
|3714||Motor vehicle parts & accessories||$50.8 million|
|2821||Plastics materials & resins||$45.4 million|
|3743||Railroad equipment & parts||$42.7 million|
|3569||General industrial machinery & equipment||$41.8 million|
A damaging effect of the embargo on Iran has been the reaction of foreign firms to U.S. reexport requirements. U.S. exporters report that their products are often designed out of foreign manufactured goods to insure that foreign exports do not fall within the scope of U.S. controls. This "designing out" damages U.S. exports, both for sales to embargoed countries and non-embargoed countries.
Iraq has been subject to a comprehensive embargo since 1990. In 1989, the United States had exports of $1.2 billion to Iraq. According to Census Bureau statistics, U.S. exports to Iraq in CY 2001 totaled $46.3 million, consisting almost entirely of industrial parts and components to support the oil industry. (Remaining exports in CY 2001 were for corn valued at $7.5 million.) The U.S. share of the U.N.-authorized Iraqi purchases is small. According to the CIA's World Factbook, Iraq's estimated imports in 2001 were $11 billion. Its primary suppliers as of 2000 were France (22 percent), Australia (22 percent), the People's Republic of China (5.8 percent), and Russia (5.8 percent). Iraq's major imports were food, medicine, and manufactures, which is consistent with the permissible commodities under the U.N.'s Oil-for-Food program. Since this program was initiated in December 1996, the United Nations has authorized $38.6 billion in Iraqi oil exports.
U.S. exports to Iraq in the first nine months of 2002 totaled $29.5 million, which - on an annualized basis - represents a decline in comparison to U.S. exports in 2001. Since the imposition of sanctions in 1990, the Department of the Treasury has export licensing responsibility for Iraq. In FY 2002, the Department of Commerce received two license applications for exports to Iraq, both of which were RWA'd, with instructions for the exporter to contact the Department of the Treasury.
The Department of Commerce did not review any license applications for SDTs or FTOs in
FY 2002. As a result, the economic impact of these controls is presumably minimal. The Department of the Treasury maintains restrictions on activities of U.S. persons involving designated terrorist entities, which the Department of Commerce's controls augment.
5. Effective Enforcement of Control. The Secretary has determined the United States has the ability to effectively enforce these controls. Because of the well-publicized involvement of these countries in acts of international terrorism, there is public knowledge and support for U.S. controls, which facilitates enforcement. The large number of items exported in normal trade to other countries, including some aircraft items and consumer goods that have many producers and end-users around the world, creates innumerable procurement opportunities for brokers, agents, and front companies working for these countries. In addition, differences in export laws and standards of evidence for violations also complicate law enforcement cooperation between countries.
The controls on designated terrorist entities facilitate export enforcement by enabling the Department of Commerce to investigate exports and reexports of unlicensed items subject to the EAR to such terrorist entities, wherever located.
The Department of Commerce views these controls as a key enforcement priority, using regular outreach efforts and other programs to keep businesses informed of concerns, gather leads on activities of concern, and conduct safeguard visits to verify end-use and end-users of U.S. commodities. The Department is moving to implement a strong program to deal with procurement by or for designated terrorist-supporting countries and entities. This program includes enhanced agent training, development of a targeted outreach program to familiarize U.S. business with concerns, and close cooperation with lead agencies working terrorism issues.
On September 27, 2002, the Department of Commerce, via the Federal Register and on the Bureau of Industry and Security's Web page, solicited comments from industry on the effectiveness of foreign policy based export controls. The comment period closed on November 29, 2002. A detailed review of the comments received is available in Appendix I.
The Department of Commerce continues to receive inquiries and to consult with industry in regard to licensing policy and practices for designated terrorist-supporting countries and for designated terrorist entities. The Department also works in coordination with the Department of State, the Department of Defense, and the Department of the Treasury to keep industry informed of changes in licensing requirements and policies toward embargoed and designated terrorist-supporting countries.
The United States continues to consult with a number of countries, both on a bilateral and a multilateral basis, on activities of designated terrorist-supporting countries. The U.S. Government also holds ongoing consultations on designated terrorist entities. In general, most countries are supportive of U.S. anti-terrorism efforts but do not implement strict export control programs similar to the United States.
The Administration has worked hard with other nations, especially nations in Europe and Latin America, to resolve disputes that arise because of implementation of the U.S. embargo. Although differences remain between the United States and other countries concerning the best method to encourage democracy and human rights, the European Union's commitment to its position (renewed in December 2001) that relations cannot improve unless Havana makes significant improvements in human rights remains very helpful.
The United States consults on an ongoing basis with its regional allies regarding anti-terrorism controls on North Korea. In particular, the United States works closely with Japan on continuing anti-terrorism controls on North Korea.
Extensive consultation with other nations on Libyan controls continues to take place under the auspices of the United Nations. The United States also has conducted numerous bilateral discussions on this topic.
The United States continues to consult with other countries regarding the internal conflict in Sudan, the resulting refugee problem, and the military attacks on aid workers committed by both sides of Sudan's internal dispute. Many of these consultations have occurred within the forum of the United Nations.
The United States consults on an ongoing basis with Syria and the other countries involved in, or party to, the Middle East peace negotiations.
The United States has an ongoing dialogue with its allies and partners on Iran's activities. The United States continues to work with other states to curb Iran's proliferation activities.
The United States has an ongoing dialogue with its allies and partners, as well as the United Nations, on Iraq. At the request of the U.S. Government, the UNSC unanimously approved Resolution 1441 on November 8, 2002, which resulted in the resumption of U.N. weapons inspections in Iraq, the first such inspections allowed by the Iraqi Government in four years. The U.S. Government is continuously consulting with its allies and the United Nations regarding Iraq.
The United States cooperates with allies and partners and shares information on the activities of designated terrorist entities. It is expected that strong ally support for the U.S. fight against terrorism will further facilitate dialogue on foreign export control expansion.
The United States has taken a wide range of diplomatic, political, and security-related steps, in addition to economic measures such as export controls, to persuade certain countries to stop their support for terrorist activities. The methods that the United States uses against a country, terrorist organization, or individual vary and is dictated by the circumstances prevailing at any given time. For example, in the case of Syria, the United States believes that maintenance of AT controls is an appropriate method to demonstrate to Syria its obligations to act against terrorist elements. The controls on designated terrorist entities indicate the United States' desire to prevent such entities from acquiring items subject to U.S. export control jurisdiction.
The foreign availability provision does not apply to items determined by the Secretary of State to require control under Section 6(j) of the Act. (4) Cognizant of the value of such controls in
emphasizing the U.S. position toward countries supporting international terrorism, Congress specifically excluded them from foreign availability assessments otherwise required by the Act. However, the Department of Commerce has considered foreign availability of items controlled to designated terrorist-supporting countries under Section 6(a).
For Syria and Iran, there are numerous foreign sources for commodities similar to those subject to control. Although Sudan's imports are low-technology items for which numerous foreign sources exist, the poor health of Sudan's economy, and thus its inability to import these goods, makes foreign availability less of an issue. The development of Sudan's oil resources would change this perception radically, as would an end to the civil war, since these events are likely to have a positive impact on the health of Sudan's economy. For North Korea, the continued maintenance of sanctions by many other countries severely limits the impact of foreign availability. For Iraq, foreign availability of items controlled by the U.S. Government for foreign policy reasons has increased since July 2002, when the United Nations' revised procedures went into full effect allowing for expedited U.N. approval for items not listed on the U.N.'s new GRL.
1. The Department of Commerce requires a license under Section 6(a) of the Act for all computers going to Iran, North Korea, Sudan, or Syria with a CTP of 6 MTOPS or above. Note also that controls apply to exports of all levels of computers to Cuba and Libya. For Iraq, the Department of Commerce maintains restrictions on items subject to the EAR that are also controlled by the Treasury Department, which administers a comprehensive embargo on Iraq.
2. See 15 CFR 746.4(c)(2)(iv, v, vi and vii).
3. See Department of State's 2001 "Patterns of Global Terrorism" report.
4. Provisions pertaining to foreign availability do not apply to export controls in effect before July 12, 1985, under sections 6(i) (International Obligations), 6(j) (Countries Supporting International Terrorism), and 6(n) (Crime Control Instruments). See the Export Administration Amendments Act of 1985, Public Law 99-64, section 108(g)(2), Stat.120, 134-35. Moreover, sections 6(i), 6(j), and 6(n) require that controls be implemented under certain conditions without consideration of foreign availability.