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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.
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 end-users under Section 6(j) of the Act, since these items meet the criteria set forth in Section 6(j)(1)(B) of the Act. Specifically, the Acting Secretary determined that these items, if 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. 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.
Section 1503 of the Emergency Wartime Supplemental Appropriations Act, 2003 (Pub. L. 108-11), granted the President authority to make inapplicable, with respect to Iraq, Section 620A of the Foreign Assistance Act and any other provision of law applicable to countries that have supported terrorism. On May 7, 2003, the President exercised this authority by issuance of Presidential Determination 2003-23, which, among other things, suspended the application of most provisions of the Iraq Sanctions Act of 1990 (Pub. L. 101-513). In addition, based on Presidential Determination 2003-23, the requirements of Section 6(j) of the Act were made inapplicable to Iraq. The Department of Commerce is presently in the process of amending the Export Administration Regulations to reflect Iraq’s significantly changed status. At present, the Department of the Treasury continues to require a license for the export to Iraq of most items on the Commerce Control List, other than items controlled exclusively for anti-terrorism reasons.
The paragraphs below describe the items requiring a license for anti-terrorism (AT) reasons for export or reexport to the designated terrorist-supporting countries, as appropriate. Pursuant to the 1993 determination of the Acting Secretary of State, and subsequent action consistent with such determination, certain items are controlled pursuant to Section 6(j) of the Act, while others are controlled pursuant to Section 6(a). The Department of Commerce refers all license applications for items controlled for AT reasons to the Department of State for review. Transactions involving exports of items controlled pursuant to Section 6(j) to military or other sensitive end-users in designated terrorist-supporting countries, as described in paragraph A below, are subject to a general policy of denial.
With respect to items controlled pursuant to Section 6(a), including exports of items described in paragraph A below to non-sensitive end-users, before approval a determination is made regarding 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 must notify the appropriate congressional committees 30 days before issuing a license, consistent with the provisions of Section 6(j) of the Act. Transactions not subject to such requirements are reviewed on a case-by-case basis.
However, as described further in Chapter 5, the United States maintains comprehensive embargoes on exports and reexports to Cuba, Iran, Libya, and Sudan. As a result, the U.S. Government reviews license applications for exports and reexports of most items to these countries based on a general policy of denial, with certain very limited exceptions. The Department of Commerce continues to maintain AT controls with respect to these countries, though such controls and the related licensing policies are secondary to the comprehensive embargoes in place. These licensing policies are described further in Chapter 5.
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. Pursuant to Section 6(a) of the Act, the Department of Commerce requires a license for the export of certain items to non-sensitive end-users in designated terrorist-supporting countries, including the following:
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) and parts to power tank transporters; scuba gear and related equipment; and pressurized aircraft breathing equipment.
D. Exports 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:
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 to designated terrorist-supporting countries. Anti-terrorism controls are maintained with respect to exports and reexports to Cuba, Iran, Libya, and Sudan, as part of broader U.S. embargoes, described in Chapter 5 below.
North Korea
Under the U.S.-North Korea 1994 Agreed Framework, North Korea agreed to freeze and eventually dismantle its nuclear program in exchange for heavy fuel oil shipments and the construction of two light water reactors that would be difficult to use for proliferation purposes. In December 2002, the Executive Board of the Korean Peninsula Energy Development Organization (KEDO), comprised of the United States, South Korea, Japan, and the European Union (EU), suspended oil shipments to North Korea after discovering that North Korea violated 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 for nuclear weapons. As of December 1, 2003, KEDO’s Executive Board suspended the North Korea light water reactor program for a period of one year in response to North Korea’s nuclear activities.
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. 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 nonproliferation, human rights, and regional stability.
Syria
The Syrian Government continues to provide political and limited material support to a number of Palestinian groups that have committed terrorist acts, but contends that the groups’ offices in Syria only undertake political and informational activities. Syria also allows Iran to resupply Hizballah in Lebanon via its territory. Prior to Operation Iraqi Freedom, the U.S. Government had several areas of concern particular to Syria and its neighbor, Iraq, including Syria’s illicit oil trade with the Saddam Hussein regime and the illicit transshipment of dual-use and military-related items into Iraq. The U.S. Government continues to view with grave concern the unmonitored movement of anti-Coalition insurgents across the Syria-Iraq border. Additionally, the U.S. Government continues to have concern about Syria’s provision of a safe haven for terrorist organizations as well as its nuclear, missile, and chemical/biological programs.
U.S. export controls reflect U.S. opposition to these activities. The controls also promote other U.S. foreign policy interests, including human rights and regional stability. The AT controls maintained on exports and reexports to Syria are consistent with the goals of the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003.
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 the availability of these AT-controlled items from other countries and that the foreign policy purpose cannot be achieved through negotiations or other alternative means. 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.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined
that these controls are compatible with U.S. foreign policy objectives
and specifically with overall U.S. policy toward the designated terrorist-supporting
countries. The Secretary has further determined that the controls will
not have any significant adverse foreign policy consequences with the extension
of these controls. These controls affirm the U.S. commitment to restrict
the flow of items and other forms of material support to countries, individuals,
or groups for terrorist
purposes.
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. Most countries are generally supportive of U.S. efforts to fight terrorism and stop the proliferation of weapons of mass destruction in countries of concern.
North Korea
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 regarding strategic trade with North Korea until North Korea places further limits on its weapons proliferation and military activities.
In December 2002, the Executive Board of the Korean Energy Development Organization (KEDO), which is comprised of the United States, South Korea, Japan, and the EU, suspended heavy fuel oil shipments to North Korea after discovering that North Korea violated 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 for nuclear weapons. Also in December 2002, the United States and its partners in the Nuclear Suppliers Group (NSG) drafted a “Watch List” of items not currently controlled by the NSG. These items do not meet the licensing threshold of the NSG export control regime; however, these items may make a material contribution to nuclear activities of concern. Many of the items on the “Watch List” are already controlled by the United States unilaterally for AT reasons, so the U.S. Government already requires a license for export or reexport of some of these items to North Korea. While the expanded “Watch List” is not intended to be the basis of expanded NSG controls, it has increased the scrutiny by NSG member countries of proposed exports of items controlled by the United States for AT reasons.
Effective December 1, 2003, the Executive Board of KEDO suspended the North Korean light water reactor program, part of the Agreed Framework, for a period of one year, because of North Korea’s nuclear activities.
Syria
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 many other countries concur that Syria’s regional activities are destabilizing, few countries maintain 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. The AT controls maintained on designated terrorist-supporting countries as a whole have had some impact on U.S. industry. The impact of such controls is described further below, with respect to countries not presently subject to a comprehensive embargo. The economic impact of a comprehensive controls maintained on Cuba, Libya, Iran, and Sudan, countries subject to unilateral U.S. embargo, are described further in Chapter 5.
North Korea
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, Thailand, Singapore, South Korea, and Russia, which account for more than two thirds of North Korea’s total trade. The CIA estimates that North Korean imports totaled $1.3 billion in 2001.
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 2002, however, U.S. exports to North Korea totaled $25 million, the vast majority of which were in the form of cereals (60 percent) and animal/vegetable fats (20 percent).
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 in the FY 1995-99 period, valued at $ 3.01 million on average (see Table 1). However, since FY 2000, the Department has approved only a handful of licenses per year. In FY 2003, the Department did not approve any licenses for North Korea; one application valued at $240,000 was rejected and two applications (valued at $4.3 million) were returned without action.
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 became eligible to be shipped without a license.
Table 1:
Export License Applications
Approved for North Korea (FY 1994-2003)
| Fiscal Year | Number of Applications | Total Value in U.S. Dollars |
|---|---|---|
| 1994 | 6 |
$66,443 |
| 1995 | 27 |
$366,498,433 |
| 1996 | 39 |
$209,134,369 |
| 1997 | 47 |
$393,281,396 |
| 1998 | 43 |
$129,113,580 |
| 1999 | 32 |
$407,887,147 |
| 2000 | 10 |
$31,130,643 |
| 2001 | 7 |
$1,187,232 |
| 2002 | 9 |
$2,947,044 |
| 2003 | 0 |
0 |
| TOTAL |
Syria
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 1992-2002, the volume of U.S. exports to Syria has been relatively stable, falling within the range of $161 million and $274 million per year. In calendar year 2002, U.S. exports totaled $274.1 million. Cereals accounted for about 28 percent of U.S. exports, followed by various types of machinery (e.g., parts for bulldozers and internal combustion engines), with about 25 percent. Other leading exports included tobacco and oil seeds.
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. In FY 2003, the Department of Commerce approved 127 license applications for Syria with a value of $200.7 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 seven applications valued at $2.9 million in FY 2003, bringing the total number of applications denied for Syria since FY 1991 to 90 applications with a total value of $36 million.
Table 2: Approved Licenses for Syria (FY 1991-2003)
| Fiscal Year | Total Applications Approved | Total Value (in U.S. dollars) |
|---|---|---|
| 1991 | 8 |
$1,041,504 |
| 1992 | 31 |
$46,366,527 |
| 1993 | 106 |
$42,896,103 |
| 1995 | 139 |
$68,298,135 |
| 1994 | 167 |
$76,379,096 |
| 1996 | 80 |
$81,006,877 |
| 1997 | 100 |
$107,003,346 |
| 1998 | 81 |
$80,707,010 |
| 1999 | 100 |
$86,534,591 |
| 2000 | 121 |
$141,539,669 |
| 2001 | 106 |
$70,269,323 |
| 2002 | 95 |
$108,101,460 |
| 2003 | 127 |
$200,664,118 |
| TOTAL | 1,261 |
$1,110,807,760 |
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. 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 recently-enacted Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 prohibits the export of all items on the CCL to Syria, unless the President exercises the waiver authority provided. The Department of Commerce will implement this prohibition, consistent with the President’s constitutional authority to conduct foreign policy. The impact of this prohibition is likely to be significant.
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 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. 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.
In a October 21, 2003, 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 (TACs) which advise the Bureau of Industry and Security (BIS), as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS webpage. The comment period closed on November 21, 2003, and eight comments were received.
While none of its comments specifically addressed anti-terrorism controls, the Industry Coalition on Technology Transfer (ICOTT) provided general comments about all foreign policy-based export controls, stating that these controls are unilateral and largely ineffective. ICOTT recommended that unilateral controls should only be used when the symbolism of the act of imposing controls outweighs the injury to American workers and businesses. In addition, ICOTT suggested that if unilateral controls are to be imposed while the United States negotiates with its trading partners to seek multilateral support, those unilateral controls should be of limited duration. Other comments of a general nature discussed the licensing treatment of embargoed countries. These comments are described in more detail in Chapter 5 below. A detailed review of all comments received can be found in Appendix I.
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. 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.
North Korea
The United States is closely consulting its regional allies regarding anti-terrorism controls on North Korea. Because of the disclosures regarding North Korea’s nuclear program, in December 2002 the United States and its partners in the NSG drafted a “Watch List” of items not currently controlled by the NSG. These items do not meet the licensing threshold of the NSG export control regime; however, these items may make a material contribution to nuclear activities of concern. Many of the items on the “Watch List” are already controlled by the U.S. Government unilaterally for anti-terrorism reasons. While the expanded “Watch List” is not intended to be the basis of expanded NSG controls, it has increased the scrutiny by our NSG partners of proposed exports of items that are not NSG-controlled but that the United States controls for Anti-Terrorism reasons. As of December 1, 2003, KEDO’s Executive Board suspended the North Korean light water reactor program for a period of one year in response to North Korea’s nuclear activities.
Syria
The United States consults on an ongoing basis with Syria and the other countries involved in, or party to, the Middle East peace negotiations. On May 3, 2003, Secretary of State Powell met in Damascus with Syrian President Bashar Assad.
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. Examples of these efforts include the continued U.S. actions in Afghanistan and Iraq, as well as consultations with the Syrian Government and legislation signed into law in an effort to bring about policy changes on the part of the Syrian Government related in part to its support of terrorist activities. The methods that the United States uses against a country, terrorist organization, or individual vary and are dictated by the circumstances prevailing at any given time. In general, the United States believes that maintenance of AT controls is an appropriate method to demonstrate the obligation of each of the designated terrorist-supporting countries to act against terrorist elements within their jurisdiction or control.
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.8 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). While there are numerous foreign sources for commodities similar to those subject to control, the continued maintenance of sanctions by many other countries severely limits the impact of foreign availability. In addition, the continued U.S. Government anti-terrorism controls serve foreign policy interests that override the impact of foreign availability.
7 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.
8 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.
