The U.S. Government maintains export controls on certain chemicals, equipment, materials, software, technology, and entire plants to further U.S. foreign policy, which opposes the proliferation and use of chemical weapons. The U.S. Government implements these controls in coordination with the Australia Group (AG), an informal forum of 39 nations and the European Commission that cooperate to halt the proliferation of chemical and biological weapons. (See Appendix II for a complete list of AG members.) The United States fulfills its obligations under the Chemical Weapons Convention (CWC) by maintaining controls on certain chemicals.(2)
The AG was formed in 1985 when the United States and 15 other nations agreed to impose export controls on a number of chemicals that could be used to produce chemical weapons. Since then, the AG has expanded its membership and has expanded its export control list to cover various chemical and biological weapons-related items. AG member countries use the AG control list and guidelines as a basis for developing and imposing their national export controls. The AG has a no-undercut policy, requiring consultation with a partner that has previously denied an AG-controlled export pursuant to AG guidelines, if the transaction is essentially identical.
The licensing requirements for chemicals, equipment, materials, software, technology, and entire plants imposed in accordance with AG commitments are as follows:
A. The U.S. Government requires a license for the export to all destinations other than AG member countries of AG-controlled precursor and intermediate chemicals, which can be used in the production of toxic chemical warfare agents; as well as relevant process control software; technology for the use, production ,and/or disposal of such items; and the facilities designed to produce them.
The U.S. Government requires a license for the export to all destinations outside AG member countries of certain chemical manufacturing facilities and equipment, toxic gas monitoring systems and detectors that can be used in the production of chemical warfare agents, and the technology for the use of such items. The countries to which these licensing requirements apply are listed in Column CB: 2 of the Commerce Country Chart, Part 738, Supplement No. 1 of the Export Administration Regulations (EAR). These licensing requirements also apply for the export of these items to designated terrorist-supporting countries.
On March 30, 2005, the Department of Commerce published a rule to amend the chemical and biological weapons end-user/end-use controls in section 744.4 of the EAR to apply to exports and re-exports of items subject to the EAR to any destination worldwide, including AG member countries, consistent with the “catch-all” provisions in the AG’s “Guidelines for Transfers of Sensitive Chemical or Biological Items” (70 FR 16110). Prior to publication of this rule, such restrictions applied only to exports and re-exports of items subject to the EAR to certain countries of concern for chemical and biological reasons.
On April 14, 2005, the Department of Commerce published a rule expanding the country scope for chemical and biological (CB) equipment from certain countries of concern for chemical and biological weapons reasons to all destinations worldwide, but excluding AG member countries (70 FR 19688). A license is now required for the export of chemical equipment controlled under Export Control Classification Numbers (ECCN’s) 2B350 and 2B351 to all non-AG countries. This rule change was implemented by Commerce to bring the United States into compliance with the AG’s “Guidelines for Transfers of Sensitive Chemical or Biological Items,” which the participating governments agreed to at the June 2002 Plenary.
On August 5, 2005, the Department of Commerce published a rule implementing the changes made to the Commerce Control List (CCL) as a result of the understandings reached at the April 2005 AG Plenary meeting (70 FR 45276). Among other changes, the rule revised existing controls on pumps controlled under ECCN 2B350. Specifically, the rule clarified the controls on pumps usable for making chemical weapons and AG-controlled precursor chemicals by revising the control language to read “multiple-seal and seal-less pumps.” Prior to publication of this rule, the control language read “multiple-seal, canned drive, magnetic drive, bellows or diaphragm pumps.”
The U.S. Government also controls items subject to the EAR because of chemical or biological end-use or end-user concerns. These controls are part of the Enhanced Proliferation Control Initiative (EPCI), announced by President George H. W. Bush on December 13, 1990.
The U.S. Government requires a license for the export of any commodity, technology, or software to all destinations, worldwide and including AG member countries, when the exporter knows that it will be used in the design, development, production, stockpiling, or use of chemical weapons. In addition, the U.S. Government may inform an exporter or reexporter that a license is required due to an unacceptable risk that the items will be used in, or diverted to, chemical weapons proliferation activities anywhere in the world.
No U.S. person may knowingly support such an export, reexport, or transfer without a license. “Support” is defined as any action, including financing, transportation, or freight forwarding, that facilitates the export, reexport, or transfer of these items.
In addition, no U.S. person may, without a license, perform any contract, service, or employment knowing that it will directly assist in the design, development, production, stockpiling, or use of chemical weapons in, or by, any country or destination worldwide.
B. The Department of Commerce reviews applications for such licenses on a case-by-case basis to determine whether the export would make a material contribution to the design, development, production, stockpiling, or use of chemical weapons. When the Department of Commerce determines that an export will make such a contribution, the Department will deny the license.
The Chemical Weapons Convention (CWC), which entered into force in April 1997, bans the development, production, stockpiling, retention, use, or transfer of chemical weapons, and establishes an extensive verification regime. The CWC Annex on Chemicals groups specified chemicals, which include both toxic chemicals and chemical precursors, into three “Schedules.” Chemicals are listed in a schedule based on factors specified in the Convention, such as the level of toxicity and other properties that enable their use in chemical weapons. The toxic chemicals and precursors on Schedule 1 were previously developed or used as chemical weapons, or pose a high risk based on the dangers identified in the Convention and have few, if any, commercial applications. The toxic chemicals and precursors on Schedule 2 pose a significant risk in light of the dangers identified in the CWC and are not produced in large commercial quantities. The toxic chemicals and precursors on Schedule 3 have been produced or used as chemical weapons or pose a risk based on the dangers identified in the CWC, and may be produced in large commercial quantities. The Department of State, under the International Traffic in Arms Regulations, controls the chemical warfare agents deemed to have military application, which by their ordinary and direct chemical action produce a powerful physiological effect.
The rule published August 5, 2005, (70 FR 45276) also updates the list of States Party to the CWC (Supplement No. 2 to Part 745 of the EAR) by adding Niue, which recently became a State Party; adding a footnote to the entry for the Netherlands to indicate that, for CWC purposes only, the Netherlands includes Aruba and the Netherlands Antilles; and removing the entry for "Yugoslavia (Federal Republic of)" and replacing it with "Serbia and Montenegro." This rule also added Ukraine as a participating country to the AG.
The export restrictions and licensing requirements for chemicals and technology imposed in fulfillment of CWC treaty obligations are as follows:
A. Exports of Schedule 1 chemicals subject to Department of Commerce jurisdiction are banned to destinations in countries that have not ratified or acceded to the CWC. The United States requires a license and prior notification of a planned export for exports of Schedule 1 chemicals to all States Parties to the CWC, including Canada. A license is also required for the shipment of Schedule 2 chemicals to States not Party to the CWC. Under the CWC, the governments of States not Party to the CWC are required to provide end-use certificates for imports of Schedule 3 chemicals.
In addition, the U.S. Government has unilaterally imposed a license requirement for chemical weapons reasons for the export of technology to produce PFIB, phosgene, cyanogen chloride, and hydrogen cyanide to all destinations in States not Party to the CWC, except Israel and Taiwan.(3) This requirement is the result of interagency discussions stemming from concerns by agencies of the U.S. Government over the potential chemical weapons use of these four chemicals.
B. The U.S. Government’s policy is to review export license applications for Schedule 1 chemicals to States Party to the CWC on a case-by-case basis. The Department of Commerce approves exports only to States Party and only for purposes not prohibited by the treaty. The U.S. Government has a policy of denial for the export of Schedule 1 chemicals to States not Party to the CWC.
The U.S. Government has a general policy of denial for applications to export Schedule 2 chemicals to States not Party to the CWC. The U.S. Government also will generally deny applications to export Schedule 3 chemicals to States not Party to the CWC, unless the importing country provides an end-use certificate.
The U.S. Government reviews exports and reexports of technology related to the development and production of four chemicals – PFIB, phosgene, cyanogen chloride, and hydrogen cyanide – on a case-by-case basis to destinations for which a license is required. However, there is a policy of denial for Cuba, Iran, Libya, Sudan, Syria, and North Korea.
The purpose of these controls is to support the efforts of the AG to halt the development and production of chemical weapons and to comply with international obligations under the CWC. In addition, these controls implement certain measures specified in Executive Order 12735 of November 16, 1990, its successor, Executive Order 12938 of November 14, 1994. In so doing, the controls provide the U.S. Government with the authority to control the export of any item from the United States when there is a significant risk that it will be used for chemical weapon proliferation purposes.
The AG works to further nonproliferation objectives through the harmonization of export controls, the exchange of information, and other diplomatic means. In addition to furthering the objectives of the AG, these controls support U.S. compliance efforts with the CWC. To ensure that States Party to the Convention do not transfer chemicals that could assist States not Party to the CWC in acquiring chemical weapons, the CWC requires that States Party restrict the export of certain chemicals listed in the CWC’s Annex on Chemicals. The controls also support the goals of the 1925 Geneva Protocol for the Prohibition of the Use in War of Asphyxiating, Poisonous or other Gases, and of Bacteriological Methods of Warfare, which prohibits the use in wartime of chemical or biological weapons.
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, in light of other factors, including foreign availability from other countries; and that the foreign policy purpose has been supported through negotiations with other countries. Many of the items covered by these controls have commercial uses and are widely available from foreign sources. Some of the major sources of these items are located in industrialized countries that are members of the AG and are States Party to the CWC. Although it is not expected that export controls alone can prevent the proliferation of chemical weapons, these controls strengthen U.S. and like-minded states’ efforts to stem the spread of such weapons and continue to be a significant part of the overall nonproliferation strategy of the United States.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives and that the extension of these controls will not have any significant adverse foreign policy consequences. The U.S. Government has a strong interest in remaining at the forefront of international efforts to stem the proliferation of chemical weapons. These controls are compatible with the multilateral export controls for chemicals and related equipment and technology agreed to by the AG. Moreover, the U.S. Government has a binding international obligation under the CWC to prohibit and eliminate chemical weapons; not to assist anyone, in any way, in chemical weapons activities; and to control certain chemical exports.
3. Reaction of Other Countries. The Secretary has determined that any adverse reaction to these controls is not likely to render the controls ineffective; nor will any adverse reaction by other countries be counter-productive to U.S. foreign policy interests. The U.S. Government continues to discuss chemical export controls with countries outside of the AG to advance the goals of nonproliferation. The governments of some developing countries claim that AG export controls discriminate against less industrialized nations by depriving them of goods and assistance in the field of chemical technology. The United States considers that these assertions are incorrect. In fact, in international fora, the U.S. Government has sought to dispel this perception by clarifying the purpose of the controls and by demonstrating that the U.S. Government denies few export license requests for shipment to developing countries.
4. Economic Impact on United States Industry. The Secretary has determined that any 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 U.S. foreign policy objectives.
In FY 2005, the Department of Commerce approved 1,522 license applications, valued at $538 million, for the export or reexport of chemical precursors and equipment. The majority of the value of these approvals (75 percent) were for precursor chemicals controlled in ECCN 1C350, which are chemicals that have many commercial uses. Almost all of the remaining value of these approvals (24 percent) were for chemical equipment controlled under ECCN 2B350, which is equipment with many commercial uses. The Department denied 8 license applications valued at $7.4 million and returned without action 115 license applications valued at $28 million. The primary reason for returning applications was for insufficient information about the transaction. The actual trade in these controlled commodities is significantly greater than the value of the license applications submitted because exporters may export many of these commodities to selected AG member countries without a license.
5. Effective Enforcement of Control. The Secretary has determined the United States has the ability to effectively enforce these controls. The size, dispersion, diversity, and specialized nature of the dual-use chemical industry make detecting and investigating potential violations difficult for enforcement personnel. Challenges include distinguishing commercial procurement from chemical weapons-related transactions, and establishing appropriate commodity thresholds for targeting and tracking exports and reexports for verification of end use and end users. In addition, enforcement officers may be exposed to personal safety risks when seizing and inspecting chemical materials.
To meet the challenge of effective enforcement of these controls, the Department of Commerce has directed resources toward preventive enforcement, in addition to continued efforts to pursue all leads provided by intelligence, industry, and other sources on activities of concern. Analysis of Shipper’s Export Declarations helps ensure that the shipments labeled “No License Required” are in fact eligible for such treatment. Also, the Department of Commerce’s extensive outreach program educates companies about export controls related to chemical products and helps prevent the illegal export of dual-use products that can be used to make chemical weapons.
In August 2005, BIS assessed a $142,450 administrative penalty against BJ Services Company of Tomball, Texas, as part of an agreement that settled charges that between 1999 and 2002, BJ Services made 13 exports of items controlled for chemical and biological weapons reasons to various destinations without obtaining the required export licenses. The settlement agreement also required that BJ Services perform an audit of its internal compliance program and submit that report to BIS’s Office of Export Enforcement.
The Department of Commerce interacts with the chemical industry in a number of ways, including with individual companies seeking export licenses, through the Technical Advisory Committees (TACs), and through trade associations. The Department consults regularly with exporting firms on proposed export transactions and marketing plans to facilitate the thorough, yet prompt, review of export license applications. Through the TACs, the Department keeps industry representatives abreast of proposals for the review of items on the Control List and gives them the opportunity to provide technical input.
The Department of Commerce works with chemical industry associations, including the American Chemistry Council and the Synthetic Organic Chemical Manufacturers Association, and with government agencies such as the Federal Bureau of Investigation and the Department of Defense, to gain valuable input regarding CWC implementation and to meet the United States’ CWC responsibilities.
In an October 13, 2005, Federal Register notice, the Department of Commerce solicited comments from industry on the effectiveness of U.S. foreign policy-based export controls. Comments were solicited from all six of the Department’s Technical Advisory Committees, as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS website. The comment period closed on November 14, 2005, and four comments were received. A detailed review of all comments received can be found in Appendix I.
These controls are consistent with the multilateral export control criteria of the AG, which includes many of the world’s major chemical producers and traders. As such, the controls have been agreed through negotiations with the member countries of the AG. In addition, a number of non-AG countries, including Russia and China, have taken steps to adopt AG-type controls. An important element of the AG’s efforts to curb the development of chemical weapons is contacting non-members to encourage them to observe similar export controls. The U.S. Government continues to encourage harmonization of export control provisions among AG participants to ensure a level playing field for U.S. exporters.
The U.S. Government continues to address the problem of the proliferation of chemical weapons on a number of fronts. Direct negotiations with countries intent on acquiring chemical weapons are not likely to prevent the use of controlled materials in such activities, nor are such negotiations likely to affect the behavior of these countries.
Alternative means to curtail the acquisition and development of chemical warfare capabilities, such as diplomatic negotiations, do not obviate the need for controls. Examples of additional means that the U.S. Government has used, and will continue to use, in an attempt to curb the use and spread of chemical weapons include:
As part of its CWC implementation activities, the Department of Commerce also collects industry reports regarding the production, processing, consumption, import, and export of toxic chemicals and chemical precursors for purposes not prohibited by the CWC (e.g., industrial, agricultural, and other peaceful purposes), which are forwarded to the Organization for the Prohibition of Chemical Weapons (OPCW). The Department of Commerce also escorts inspectors from the OPCW as they inspect certain U.S. chemical facilities to verify that activities are consistent with the information provided in the industry reports and with other treaty provisions.
Past reviews conducted by the Department of Commerce revealed that a wide range of AG chemical precursors and production equipment were available from non-AG countries. Non-AG suppliers of precursors and/or related production equipment include Brazil, Chile, Colombia, India, Mexico, China (PRC), South Africa, the countries of the former Soviet Union, Taiwan, and Thailand. However, most have become States Party to the CWC and will take steps under this treaty to prevent chemical weapons development and production. As such, the U.S. Government has made efforts through its membership in both the AG and CWC to secure the cooperation of foreign governments to control the foreign availability of chemical precursors and production equipment.
1. Chapter 7 of this report addresses U.S. biological controls.
2. The Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction (the “Chemical Weapons Convention” or CWC) was ratified by the United States on April 25, 1997, and entered into force on April 29, 1997.
3. A license also is required to export this technology for antiterrorism (AT) reasons.