The Missile Technology Control Regime (MTCR) was created on April 16, 1987, by the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom to limit the proliferation of missiles capable of delivering nuclear weapons. The MTCR was expanded in 1993 to include missile delivery systems for all types of weapons of mass destruction (WMD) and now has 33 member countries. See Appendix II for a complete list of MTCR member countries. There also are several countries, including Israel and Romania, that unilaterally adhere to the MTCR Guidelines.
The MTCR Guidelines and the Equipment, Software and Technology Annex form the basis for U.S. missile technology controls. The MTCR Guidelines provide licensing policy, procedures, review factors, and standard assurances on missile technology exports. The Annex is the list of missile-related items and is divided into two categories. Category I items include missile systems and major subsystems, production facilities, and production equipment for missile systems capable of delivering a 500 kg payload to at least a 300 km range. Category II items include materials, components, and production and test equipment associated with Category I items, as well as missile subsystems, production facilities, and production equipment for missile systems with a 300 km range, regardless of payload.
The Department of Commerce is responsible for administering controls on manufacturing equipment for Category I items, and all dual-use items in Category II. There are approximately 120 entries on the Commerce Control List (CCL) that are subject to missile technology controls. Category I items have a strong presumption of denial, and the transfer of production facilities for Category I items is prohibited. The Department of Commerce will approve the export of Category II items only after a case-by-case review. The United States observes the multilateral commitment to honor the denial of licenses by other members and to support such denials through a “no undercut” policy. This policy enhances efforts to prevent missile proliferation and prevents unfair commercial advantage among regime members.
MTCR member countries seek to foster the cooperation of non-member countries in limiting the spread of delivery systems for WMD and have focused such efforts in an MTCR-sponsored series of workshops and seminars. This effort – begun in 1996 – allows MTCR members and invited non-members to explore different approaches to improve export controls and prevent missile proliferation.
In summary, the licensing requirements and policy for missile technology controls described in Parts 742.5 and 744.3 of the Export Administration Regulations (EAR) are as follows:
A. The U.S. Government requires a license for the export or reexport to all destinations (except Canada) of those dual-use items specifically identified on the CCL as controlled for missile technology reasons. This exclusion for Canada is currently under review.
On September 22, 2003, the EAR was revised to reflect changes to the MTCR Annex that were agreed to by member countries at the September 2002 Plenary in Warsaw, Poland. The definitions for missile range and payload, which are key determinants of the level of control applicable to rocket and unmanned aerial vehicle systems (and had been the subject of several years of debate in the MTCR), were added to the list of terms in the Annex. Amendments to certain entries on the CCL to clarify the scope and jurisdiction of controls on global navigation satellite receiving equipment were also published and made effective by this rule (68 FR 54655).
Additionally, the U.S. Government controls items subject to the EAR due to missile-related end-use or end-user concerns. These controls are part of the Enhanced Proliferation Control Initiative (EPCI), announced by the President on December 13, 1990.
B. The Department of Commerce will review applications for licenses on a case-by-case basis to determine whether the export would make a material contribution to the proliferation of missiles. When the Department of Commerce determines that an export will make such a contribution, the application will be denied.
These controls curtail the availability of goods and technology and other support that could contribute to missile proliferation. U.S. export controls on specific types of missile-related equipment and technology, in coordination with other supplier countries, limits the proliferation of missile systems and related technology. These controls complement U.S. and international nuclear, chemical, and biological nonproliferation efforts by blocking the development of unmanned delivery systems for WMD. These controls lend clear U.S. support to the collective effort of the MTCR to address mounting international concern regarding missile proliferation.
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 limited foreign availability of these MT-controlled items from other countries and that the foreign policy purpose has been in part achieved through negotiations. Although some controlled items are available from other countries, cooperation among the United States, its MTCR partners, and other like-minded countries, many of which are major producers of the items under control, has hindered the efforts of proliferators to develop or acquire militarily-effective missiles. The Secretary has determined that extending these controls is likely to limit the spread of missile delivery systems.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives and will not have any significant adverse foreign policy consequences with the extension of these controls. Halting the spread of missiles and related equipment and technology worldwide is a key U.S. national security and nonproliferation objective. Missile technology export controls are consistent with, and contribute to, achieving this objective. U.S. membership in the MTCR complements existing nuclear, chemical, and biological nonproliferation policies by curbing the spread of missile technology and equipment for the delivery of WMD.
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 United States is confident that other members of and unilateral adherents to the MTCR, many of whom are also the leading suppliers of missile-related technology, will continue to support and strengthen this control regime. MTCR partners share information regarding denials of Annex items and are committed to a “no undercut policy.” MTCR partners also share information about potential activities of proliferation concern, and have cooperated to interdict specific shipments of proliferation concern. The number of MTCR members and other countries willing to cooperate with the regime has increased over the past few years. Finally, the United States and its MTCR partners are actively engaged in an outreach program to encourage additional countries to adhere to the Guidelines and implement effective export controls on MTCR items.
4. Economic Impact on U.S. Industry. The Secretary has determined that any adverse effect of these controls on the U.S. economy, including on the competitive position of the United States in the international economy, does not exceed the benefit to U.S. foreign policy objectives. Only a narrow list of items are subject to missile controls and the effect on overall U.S. exports is limited. The commitment by MTCR to a “no undercut policy” helps ensure that no member obtains an unfair commercial advantage in the international marketplace.
In FY 2003, the Department of Commerce approved 590 applications, valued at $955 million, for the export or reexport of missile-related items. Of these, 400 applications valued at $850 million were for exports destined to Wassenaar member countries. In addition, the Department of Commerce denied 10 applications valued at $7.9 million, and returned without action 20 applications valued at $4 million. Comparatively few licenses for missile technology items are denied due to the following reasons: (1) exporters do not generally pursue transactions they understand will be rejected (based on the applicable licensing policy); and (2) most of the transactions are to countries that do not pose missile proliferation concerns (e.g., MTCR member-nations).
5. Effective Enforcement of Control. The Secretary has determined the United States has the ability to effectively enforce these controls. Multilateral controls on missile technology provide a strong framework for cooperative enforcement efforts overseas. However, there are challenges for the enforcement of controls on dual-use goods related to missile development. First, it is difficult to detect and investigate cases under the “knowledge” standard set by the EPCI “catch-all” provision. Second, some countries do not yet have “catch-all” laws or have different standards for “catch-all,” which complicates law enforcement cooperation. Third, identifying illegal exports and reexports of missile-related goods requires significant resources.
To enforce these controls effectively, the Department of Commerce continues to focus on preventive enforcement, including an outreach program to educate companies about export controls and to increase awareness of “red flags” that may indicate risky transactions. This program is an important component of the Department of Commerce’s efforts to prevent companies from illegally exporting dual-use products or equipment that could be used to make missiles. Recognizing the importance of export enforcement, the MTCR held its third Enforcement Experts meeting at the MTCR Plenary in Buenos Aires, Argentina, in September 2003.
The Department of Commerce normally holds discussions with industry representatives on issues involving the MTCR Annex through the Transportation Technical Advisory Committee (TransTAC), and other relevant TACs as appropriate. Further, the Department of Commerce participates in interagency working groups that review proposed changes to the Annex and engages in discussions of the proposals with companies that have relevant expertise.
In an 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 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.
Consultation with other MTCR members is a fundamental element of U.S. missile technology control policy. Consultations with non-MTCR countries also are essential to U.S. missile nonproliferation policy. The U.S. Government shares information about activities of concern with other countries and seeks to prevent or stop certain transactions of missile proliferation concern. The United States also shares denial information with its MTCR partners.
As cited earlier, the Department of Commerce published an amendment to the EAR on September 22, 2003, to implement changes to the MTCR Annex that were agreed to by the United States and its MTCR partners at the September 2002 Plenary meeting.
The missile sanction provisions in Section 73 of the Arms Export Control Act, and Section 11B of the Export Administration Act, provide for the imposition of export, import, and procurement sanctions on foreign entities engaged in certain kinds of activities relating to the transfer of MTCR Annex items to non-MTCR adherent countries. In the past, the United States has imposed missile sanctions on entities in China, Egypt, India, Iran, Macedonia, Moldova, North Korea, Pakistan, Russia, South Africa, and Syria. Missile sanctions are used to encourage the governments of the sanctioned entities to adopt responsible nonproliferation behavior and to send a clear message about the United States’ strong commitment to missile nonproliferation.
Diplomatic efforts by the United States and MTCR partners to encourage additional countries to adhere unilaterally to the MTCR Guidelines continue. Such efforts are aimed at encouraging non-MTCR members to implement and enforce effective missile technology export controls. The United States has an obligation to maintain and renew its export controls based on its membership in the MTCR yet has pursued alternative means to achieve the purpose of the controls through its consultations with non-MTCR countries.
Possible suppliers of missile technology that are not MTCR members include, but are not limited to, China (PRC), Egypt, India, Israel, and Taiwan. Some of these countries, such as Israel, adhere unilaterally to the MTCR Guidelines and apply MTCR-type controls. The United States continues to approach other nations that produce MTCR Annex-controlled items to secure their cooperation in controlling the foreign availability of these items and urging their vigilance in applying MTCR Guidelines to help prevent missile proliferation. The U.S. Government has imposed sanctions on entities in a number of countries when those entities have not altered their proliferation behavior.