CURRENT AND FUTURE CHALLENGES

FOR ASIAN NONPROLIFERATION EXPORT CONTROLS:

A REGIONAL RESPONSE

Scott A. Jones

October 2004

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ISBN 1-58487-174-1
iii

FOREWORD

 The proliferation of weapons of mass destruction (WMD) and advanced 

conventional arms remains one of the gravest threats to the security of 

the international community. Countries of concern continue to pursue 

WMD by purchasing related technologies and components from foreign 

suppliers. 

 Export controls represent one of the key elements of a comprehensive 

nonproliferation strategy. They include procedures adopted by countries 

to regulate and monitor trade in weaponry and weapons-related (dualuse) technologies. However, the effectiveness of export control as a tool 

for limiting the spread of sensitive technologies and weaponry has been 

compromised by globalization and a complex array of international 

developments. The distinction between military and commercial products, 

for example, has become less clear. Therefore, it is likely that export control 

policies and institutions need to be continually adjusted if they are to serve 

international security objectives. 

 How countries in the Asia region respond to the relentlessly changing 

nature of the proliferation challenge will affect profoundly the shape of 

global security. In many instances, the countries of the region are major 

transshipment and assembly points for critical strategic dual-use goods 

and technologies. Some of these countries are major producers of strategic 

items, while others are or have potential to become suppliers. Yet, national 

export control systems in the region, with a few exceptions, remain 

rudimentary and resource-poor.

 This monograph examines the current state of export control system 

development in the greater Asia region, with particular emphasis on 

the economic and security environment in which these systems operate. 

Identification then is made of the gains and remaining deficiencies in 

export control development. The monograph concludes by examining the 

applicability of the European Union’s effort to coordinate export controls 

to the regional forces shaping the regional trade and security dynamics in 

Asia and what the United States can do to facilitate greater export control 

development and cooperation. 

DOUGLAS C. LOVELACE, JR.

Director

Strategic Studies Institute 
iv

BIOGRAPHICAL SKETCH OF THE AUTHOR

SCOTT A. JONES is Director of Export Control Programs at the 

Center for International Trade and Security at The University of 

Georgia. Upon completing his MA, Dr. Jones took a year-long 

position at the Delegation of the Commission for the European 

Union (EU) in Washington, DC. Subsequently, Mr. Jones worked 

for Los Alamos National Laboratory on a Department of Energy/

Los Alamos program that assisted the former Soviet Republics in 

export control development. His areas of specialization include 

foreign and security policy of the states of the former Soviet Union, 

Ukraine, export control developments in the EU, and conventional 

arms transfers. In addition, he has briefed government officials from 

Russia, Ukraine, the Caucasus states, the United States, and Europe 

on export control and security-related issues. He has received 

research and travel grants from the United States Institute of Peace, 

the National Research Council, the W. Alton Jones Foundation, 

and other foundations. Dr. Jones is the author of The Evolution of 

the Ukrainian Export Control System: State Building and International 

Cooperation (London: Ashgate, 2002). He is also a contributor to Arms 

on the Market: Reducing the Risk of Proliferation in the Former Soviet 

Union (New York: Routledge Press, 1998) and a co-editor of and 

contributor to Crossroads and Conflict: Security and Foreign Policy in 

the Caucasus and Central Asia (New York: Routledge Press, 1999). He 

has published articles in Arms Exports (in Russian), The Middle East 

Review, Contemporary Security Policy, Defense News, Jane’s Intelligence 

Review, East Asian Review, The Nonproliferation Review, and The 

Monitor: International Perspectives on Nonproliferation Nuclear Control

(in Russian). Dr. Jones received his BA and Ph.D. in political science 

and philosophy at the University of Georgia and a MA at Lancaster 

University in the UK. 
v

SUMMARY

 As recent investigations into the vast nuclear network fronted 

by Pakistani scientist A. Q. Khan have made clear, the black market 

in nuclear supplies operated with ease and impunity. Much of this 

network was located and operated in Malaysia, a country with, at 

best, a rudimentary export control system. Through normal trade 

channels, the constituent components of nuclear weapons originated 

in and transited through this Asian nation, serving to draw further 

attention to how states in this economically dynamic region oversee 

the trade in strategic goods and technologies. 

 Export controls represent one of the key elements of a 

comprehensive nonproliferation strategy. They include procedures 

adopted by countries to regulate and monitor trade in weaponry 

and weapons-related (dual-use) technologies. However, the 

effectiveness of export control as a tool for limiting the spread of 

sensitive technologies and weaponry has been compromised by 

globalization and a complex array of international developments. 

The distinction between military and commercial products, for 

example, has become less clear. Therefore, it is likely that export 

control policies and institutions need to be continually adjusted if 

they are to serve international security objectives. 

 Regional export control standards are quite varied. For example, 

over the past 2 years, China passed legislation related to nuclear, 

chemical and biological, missile, and military exports. Taiwan 

updated its export regulations with regards to Mainland trade. 

South Korea implemented a catch-all regulation. And Singapore 

passed legislation strengthening state control over the export of 

strategic goods, including munitions and related dual-use goods. 

Other states, such as Laos, Myanmar, and Malaysia, have made only 

minor, primarily legislative, changes, most of which are superficial. 

For example, despite U.S. efforts to persuade Malaysia to adopt more 

stringent nuclear export controls, its foreign minister said that he 

did not currently “see any necessity” to sign the Additional Protocol 

to Malaysia’s nuclear safeguards agreement. Recent disclosures 

about Libya’s nuclear program revealed that a Malaysian firm 

manufactured some of Tripoli’s nuclear equipment.
vi

 How countries in the Asia region respond to the relentlessly 

changing nature of the proliferation challenge will affect profoundly 

the shape of global security for many years. In many instances, 

the countries of the region are major transshipment and assembly 

points for critical strategic dual-use goods and technologies. Some 

of these countries are already major producers of strategic items, 

while others are or have potential to become suppliers. Yet, national 

export control systems in the region, with a few exceptions, remain 

rudimentary and resource-poor.

 As Asia develops into a clearly demarcated economic “region,” 

it is confronted by similar export control challenges as those faced 

in Europe with the advent of the Common Market. As such, a 

regional system of export control standards and practices emerged 

as a means to ensure not only economic parity, but regional and 

international security as well. While not necessarily as advanced in 

terms of regional identity as the European free trade area, the states 

of Asia could benefit profitably from a regional approach to export 

control development and coordination. 

 In addition, the states of Asia could also gain from increased 

export control cooperation with the United States. As a global leader 

in nonproliferation, the United States can provide critical assistance 

to export control development efforts through training and the 

allocation of other resources. Likewise, the United States should 

focus its export control outreach efforts to the less developed export 

control systems in Asia, especially the transshipment countries. 

 The intersection of trade and security cuts to the heart of the 

matter in Asia, where national economies profoundly depend on 

trade, as they do on regional and international security. The internal 

challenge for countries of the Asia region is to develop systems 

compatible with their political, economic, and security needs, while 

addressing the overall threat posed by the proliferation of weapons 

of mass destruction.
1

CURRENT AND FUTURE CHALLENGES

FOR ASIAN NONPROLIFERATION EXPORT CONTROLS:

A REGIONAL RESPONSE

INTRODUCTION

 The proliferation of weapons of mass destruction (WMD) and 

advanced conventional arms remains one of the gravest threats to 

the security of the international community. Countries of concern 

continue to pursue WMD by purchasing related technologies and 

components from foreign suppliers. Recent disclosures regarding 

the extent of Pakistan’s involvement in nuclear proliferation 

suggest the security ramifications of international trade remain vital 

concerns. Of increasing alarm, too, is the tangible threat posed by 

terrorist organizations such as al-Qaeda that are seeking to inflict 

mass casualties, a fact in keeping with the increasing lethality of 

international terrorism.1

 Furthermore, unregulated arms transfers 

can introduce instability and conflict into countries and regions, 

making them breeding grounds for terrorism. 

 A great deal of policy attention and resources has been 

directed towards addressing this proliferation threat, as well 

as towards securing nuclear materials from possible theft or 

sabotage. Nevertheless, policymakers should not overlook that 

most countries and terrorists seek to purchase the components they 

need for developing WMD.2

 Consequently, greater attention and 

resources need to be devoted to strengthening export controls, with 

consideration for the needs of legitimate trade. 

 Export controls represent one of the key elements of a 

comprehensive nonproliferation strategy. They include procedures 

adopted by countries to regulate and monitor trade in weaponry 

and weapons-related (dual-use) technologies. However, the 

effectiveness of export control as a tool for limiting the spread of 

sensitive technologies and weaponry has been compromised by 

globalization and a complex array of international developments. 

The distinction between military and commercial products, for 

example, has become less clear.3 Therefore, it is likely that export 

control policies and institutions need to be adjusted continually if 

they are to serve international security objectives. 
2

1. Hong Kong

2. Shanghai

3. Singapore

4. Kaohsiung

5. Rotterdam

6. Pusan

7. Bremerhaven

8. Tokyo

9. Genoa

10. Yantian

11. Antwerp

12. Nagoya

13. Le Havre

14. Hamburg

15. La Spezia

16. Felixstowe

17. Algeciras

18. Kobe

19. Yokohama

20. Laem Chabang

* Bold indicates ports in Asia.

 How countries in the Asia region respond to the relentlessly 

changing nature of the proliferation challenge will affect profoundly 

the shape of global security for many years.4

 In many instances, 

the countries of the region are major transshipment and assembly 

points for critical strategic dual-use goods and technologies.5

 Some 

of these countries are already major producers of strategic items, 

while others are or have potential to become suppliers.6 Yet, national 

export control systems in the region, with a few exceptions, remain 

rudimentary and resource-poor.7

 This monograph examines the current state of export control 

system development in the greater Asia region, with particular 

emphasis on the economic and security environment in which 

these systems operate. Identification is then made of the gains and 

remaining deficiencies in export control development. The author 

concludes by examining the applicability of the European Union’s 

effort to coordinate export controls to the regional forces shaping the 

trade and security dynamics in Asia. 

THE ECONOMIC CONTEXT: GREATER REGIONALIZATION 

AND INTERDEPENDENCE

Increasing regionalization―regionalization being the complex 

network of flows across state boundaries involving the movement of 

goods and services, capital, technology, information, and people―

best characterizes the Asian economic context.8

 Intra-Asian trade 

accounts for about 45 percent of East Asia’s total trade. In addition, 

trade throughput via and from the region has increased dramatically 

since the late 1960s.9

 For example, 11 of the top 20 “megaports” are in 

Asia (see Table 1).10

Table 1. World Megaports.
3

 Between 1990 and 2001, Asia’s share of global merchandise and 

commercial services exports rose from 21.8 percent to 25 percent, 

and 16.8 percent to 20.8 percent, respectively. During the same 

period, the comparable share for the Association of South East Asian 

Nations (ASEAN) countries rose from 4.2 percent to 6.4 percent. The 

Chinese share of global exports rose from 1.8 percent to 4.4 percent.11

In the case of China, the last few years have seen much higher levels 

of economic interaction with the rest of Asia. Sino-Japanese trade 

reached U.S.$53.9 billion in 2002, and exports from China to Japan 

increased by 3.1 percent to U.S.$25.7 billion and imports from Japan 

rose 14.5 percent to U.S.$28.2 billion. Japan is now China’s second 

largest trading partner, while China became the largest importer of 

Japanese goods and services in the first half of 2002. Hong Kong, 

Taiwan, South Korea, Singapore, and Thailand are also among 

China’s top 10 trading partners. Taiwan is China’s fifth-largest 

trading partner. Since 1987, trade between mainland China and 

Taiwan has totaled almost $2 trillion; it grew at a 7 percent annual 

rate in 1999.12

 The regional concentration of trade is but one of several indicators 

of regionalization. Underlying much of the rapid expansion of 

intraregional trade in recent years has been a massive expansion 

in foreign direct investment (FDI) flows in the region. Trade policy 

reform has figured prominently in the rising importance of trade 

and FDI in the region. Unilateral liberalization of tariff and nontariff 

barriers took place in Indonesia, Malaysia, the Republic of Korea, 

and Thailand during the 1990s.13 The accelerated relocation of 

Japanese production in different parts of Asia has been particularly 

significant. It has established Japan as the undisputed leader in Asia 

in terms of technology transfer, capital goods, and economic aid.14

Having achieved a secure foothold in Korea and Taiwan, Japan 

has since rapidly expanded its stake in the ASEAN economies, 

and is developing a substantial presence in China and Indochina. 

The relocation and off-shore model of production ensures a greater 

diffusion of technology. 

 The interpenetration of national economies is also stimulated by 

the exponential growth of financial flows across national boundaries, 

coupled with the increasing dominance of intra-company as a 
4

proportion of bilateral trade. The degree of financial interdependence 

was evidenced by the 1997 financial crisis, which resulted in the 

Chiang Mai + 3 Initiative.15 Intra-company trade currently accounts 

for nearly four-fifths of Japan’s total exports and half of its imports. 

Complementing and reinforcing these transnational production 

structures is the emergence of such regional economic zones as the 

Johor-Singapore-Riau Growth Triangle, the Indonesia-MalaysiaThailand Growth Triangle, the East Asia Growth Area, the Southern 

China Growth Triangle, and the Tumen River Delta Economic.16

Finally, mention must be made of the increasing mobility of labor, 

with the strongly performing economies of the region attracting 

large numbers of legal and illegal immigrants, some of whom may 

have links to terrorist organizations.17

 Energy sharing has been one of the most notable examples of 

regional cooperation. In January 2001, the leaders of Indonesia and 

Singapore opened a vital underwater gas pipeline between their 

nations. During the next 20 years, this pipeline is expected to channel 

more than $8 billion worth of natural gas from Indonesia’s West 

Natuna fields to Singapore. Because wealthy Singapore has virtually 

no natural resources, Indonesia viewed its natural gas and other 

resources as tools to be used for political gain. Thus the pipeline was 

a sizable accomplishment, reflecting an increasing maturity in the 

political relationship between the two countries. Other gas deals are 

in development. Malaysia plans to build a pipeline to West Natuna 

and is encouraging Bangkok to develop gas fields in the Gulf of 

Thailand. Similarly, Thailand and Burma have begun extracting 

gas from eastern Burma’s Yadana deposits.18 China’s expanding 

economy will also require vast infusions of foreign energy, likely 

prompting Beijing to attempt to tap into Southeast Asia’s gas fields. 

Meanwhile, in Northeast Asia, Japan has inked several deals to 

purchase the majority of Brunei’s oil.19

 Nevertheless, the extent, intensity, and efficiency of these 

economic and functional linkages are clearly limited.20 There are 

many states (Cambodia, Laos, North Korea, and several of the 

Pacific island states) and many areas within states (e.g., noncoastal 

areas of China, parts of Burma, and the Russian Far East), where 

these linkages are nonexistent or at best tenuous. Moreover, 
5

many of the linkages which are said to contribute to regional 

interdependence (e.g., Japan-ASEAN trade and investment flows) 

are acutely asymmetrical, and, to that extent, likely to promote social 

and political tensions both within and across national boundaries. 

Nevertheless, both the continuing intermingling of economies and 

trade flows and interdependence of financial systems define―and 

to some extent delimit―the scope of the “Asian” region in a manner 

that transcends the traditional boundaries of states.21

THE SECURITY CONTEXT: MILITARIZATION 

AND PROLIFERATION

During the last decade, the top three regions for arms imports―

Western Europe, the Middle East, and East Asia―accounted for 78 

percent of the world’s arms imports. Of the top five arms importing 

countries in 2000, two are in East Asia―Japan and Taiwan. Military 

spending, armed forces, and arms acquisition are all rising in Asia. 

Between 1988 and 1998, as global military expenditures fell by 35 

percent, those in East Asia and the Pacific actually increased by 38 

percent. (South Asia increased its military spending by 25 percent.) 

Figures from the Stockholm International Peace Research Institute 

note that military expenditures declined worldwide from $1.066 

trillion in 1988 to $719 billion in 1998. But in Asia, they climbed from 

$95 billion to $130 billion. 

 Japan, China, and the Koreas have accounted for the majority 

of the region’s military spending during the past decade, while 

the arms race between India and Pakistan has swelled South Asia’s 

military budgets. Less visibly, military expenditures in ASEAN 

countries increased by 52 percent in real terms between 1988 and 

1997. This increase, greater in both absolute and percentage terms 

than that of any other region, occurred as the world as a whole cut 

military spending by more than one-third (see Table 2).22

 The increased spending is going, in large part, to the acquisition 

of technologically advanced conventional weapon systems: combat 

aircraft, ocean-going naval ships, tanks, armored vehicles, armed 

helicopters, and missiles and related dual-use components and 

technologies.23 Moreover, much new acquisition is through domestic 
6

800

700

600

500

400

300

200

100

0

1993 1995 1997 1999 2001

Asia and Oceania

World

Table 2. Military Expenditure (1993-2002).

arms production. China, Japan, South Korea, India, and Taiwan are 

pursuing the development of national arms industries that could 

eventually make them, in theory, fully independent of foreign 

imports.24

 Proliferation continues to pose a particular threat to the security 

and stability of East Asia, where several states already have nuclear 

weapons and ballistic missile capabilities, and others have the 

technical expertise necessary to develop WMD.25 For example, the 

U.S. Central Intelligence Agency contends that throughout the 

second half of 2001, North Korea continued to export significant 

ballistic missile-related equipment, components, materials, and 

technical expertise to the Middle East, South Asia, and North 

Africa.26 P’yongyang attaches high priority to the development 

and sale of ballistic missiles, equipment, and related technology.27

Exports of ballistic missiles and related technology are one of the 

North’s major sources of hard currency, which fuel continued 

missile development and production.28 In addition, in a provocative 

decision, North Korea announced on December 12, 2002, that it was 

restarting nuclear facilities that had been frozen since 1994, and it 

ordered international monitors to leave the country. As international 

concern grew that P’yongyang was resuming its nuclear weapons $ U.S. (Billion)
7

program, North Korea announced January 10, 2003, that it was 

immediately withdrawing from the nuclear Nonproliferation Treaty 

(NPT). Shortly thereafter, it began a series of provocative missile 

tests, culminating in a test during the inauguration of South Korea’s 

new president.29 In addition, many North Korean trading companies 

in Southeast Asia―mainly in Thailand, Singapore and Hong Kong―

have been set up with the specific purpose of obtaining technology 

for North Korea’s defense industries (for more in-depth case study, 

see Appendix I).30

 For its part, Beijing has taken steps to address U.S. and other 

concerns and increase its partial participation in international 

nonproliferation regimes since 1991.31 Nevertheless, for much of 

the 1990s, China’s proliferation record was poor. For example, the 

Director of Central Intelligence (DCI) noted that, for July-December 

1996, “China was the most significant supplier of WMD-related 

goods and technology to foreign countries.”32 The 1998 report of 

the Rumsfeld Commission identified China’s weapons proliferation 

as a “threat.” The DCI’s semi-annual reports have named the 

People’s Republic of China (PRC) (plus Russia and North Korea) 

as “key suppliers” of dangerous technology.33 Although Chinese 

firms continue to provide some worrisome dual-use assistance to 

a few countries (such as Pakistan and Iran), the scope, content, 

and frequency of its export of sensitive weapons-related items 

has declined and diminished. In the latter half of the 1990s, the 

Chinese government began to institutionalize its nonproliferation 

commitments by developing its export control infrastructure, a 

trend that has continued in recent years. Moreover, an expanding 

community of Chinese officials, scientists, military officers, and 

academics involved in arms control and nonproliferation research 

and policymaking has helped sensitize senior leaders to the 

importance of these issues to the country’s overall foreign policy 

and national security.34 China recently gained membership in the 

Nuclear Suppliers Group (NSG), and has expressed similar interest 

in joining the Missile Technology Control Regime.35

 Finally is the looming threat of terrorism. For example, in a recent 

report on the threat of terrorism in South East Asia, the government 

of Singapore said that, while some of these groups existed before 
8

al-Qaeda and have local agendas, their link-up with Osama bin 

Laden’s organization had made them more deadly. The report further 

noted that although the U.S.-led military strikes on Afghanistan 

had disrupted al-Qaeda bases, bin Laden’s network could still tap 

alliances in Asia, including Jemaah Islamiah, to stage more attacks: 

“With their radical agenda and their enhanced skills acquired from 

al-Qaeda, these groups, if left unchecked, will pose a grave threat to 

the security of South-East Asia for a long time to come.”36

 In summary, growing trade interdependence, increasing 

indigenous design and production capabilities (i.e., a growing pool 

of potential and actual sensitive technologies suppliers), expanding 

military budgets, intensified technology transfers to and from the 

region, and an ever-expanding share of the cargo trade market 

represent the regional challenges to the configuration and effective 

execution of nonproliferation export controls. 

 At the global level, governments are also confronted with several 

obstacles to practicing effective export controls. Globalization 

presents several challenges, such as the transnationalization of the 

defense industry, the rapidly blurring distinction between civilian 

and military technologies, the increasing intangibility of technology 

and its transference, and the incessant need to update control lists 

because of the brisk turnovers in technological developments. 

The mercurial threat of terrorist use of WMD amplifies these 

difficulties.37

 Overall, the abiding export controls challenge for any government 

is identifying, then striking, the proper balance between trade and 

security. The very name of this nonproliferation tool is imprecise―

export control―with the connotation being that trade comes at the 

expense of security. The nexus of trade and security cuts to the 

heart of the matter in Asia, where national economies profoundly 

depend on trade, as they do on regional and international security. 

The internal challenge for countries of the Asia region is to develop 

systems compatible with their political, economic, and security needs 

while addressing the overall threat posed by the proliferation of 

WMD. The next section examines the gains made by and deficiencies 

in the nonproliferation export control systems of the Asian region. 
9

CURRENT ASIAN EXPORT CONTROL DEVELOPMENT: 

GAINS AND DEFICIENCIES

 In terms of export control development, the Asian region 

represents a wide array of stages. However, one of the most 

significant characteristics of export control policies in East Asia 

is the strong correlation between levels of economic growth and 

implementation of multilateral export control measures; that is, a 

country that started economic growth in an earlier period and has a 

high gross domestic product (GDP) level tends to implement more 

complete measures of export controls.38 For example, Japan has one 

of the most sophisticated export control systems in the world.39 Japan 

has also been active in nonproliferation export control regimes, 

having been a founding member the Australia Group, the Missile 

Technology Control Regime (MTCR), the NSG, and the Wassenaar 

Arrangment. 

 In addition, the Japanese government has played a key leadership 

role in regional nonproliferation export controls by establishing basic 

guidelines that include nonproliferation factors in providing official 

development assistance (e.g., Official Development Assistance 

[ODA] Charter implemented in 1991)40 and by disseminating 

information on export controls through multilateral seminars (e.g., 

Asian Export Control Seminar started in 1993), bilateral talks, and 

training programs.41 In 1994, Japan also introduced a General Bulk 

License comparable to similar procedures in the United States 

and Europe. The procedure rewards Japanese trading partners for 

setting up export control programs by simplifying and shortening 

licensing procedures. In the region, Hong Kong (April 1994) and 

South Korea (October 1994) were the first to receive this status. 

Since more than 64 percent of Japanese exports of the items formerly 

controlled by the Coordinating Committee on Multilateral Export 

Controls (COCOM) go to countries in the region, all of which require 

licenses, the Japanese government hopes this will help induce more 

of its regional neighbors to adopt complementary export control 

systems.42 For example, Japan received a South Korean task force 

team of export control officials in September 2002 to assist with the 

introduction of catch-all controls in Republic of Korea (ROK). Other 

recent bilateral initiatives include bilateral agreements signed with 
10

Hong Kong and Singapore aimed at preventing indirect exports of 

products that can be converted into weapons.43

 In other states of the region, export control developments varied 

in 2002. For example, China passed a raft of legislation related to 

nuclear, chemical and biological, missile, and military exports.44

Taiwan updated its export regulations with regard to Mainland trade. 

South Korea implemented a catch-all regulation, and Singapore 

passed legislation strengthening state control over the export of 

strategic goods, including munitions and related dual-use goods.45

Other states, such as Laos, Myanmar, and Malaysia, have made only 

minor, primarily legislative, changes, most of which are superficial. 

For example, despite U.S. efforts to persuade Malaysia to adopt more 

stringent nuclear export controls, its foreign minister said that he 

did not currently “see any necessity” to sign the Additional Protocol 

to Malaysia’s nuclear safeguards agreement. Recent disclosures 

about Libya’s nuclear program revealed that a Malaysian firm 

manufactured some of Tripoli’s nuclear equipment.46

 While other control systems in the region may not be as 

comprehensive as Japan’s, it is important to consider that individual 

economic and political profiles are relevant to the form of the export 

control system. To use the Japanese example again, Japan is a key 

supplier country, a major economic and political power, as well 

as a transshipment point. Comprehensive licensing, enforcement, 

and regime adherence elements are appropriate to its political and 

economic particulars. Mongolia, on the other hand, is not a supplier 

country and therefore may not have comprehensive end-use checks 

or extensive government outreach functions in place. Indonesia, 

furthermore, lists only one industry―P. T. Pindad―as exporting 

controlled goods and technologies and therefore does not require a 

significant industry outreach capacity. Nevertheless, while the forms 

may vary, there must be a higher degree of harmonization between 

states of the region to ensure that loopholes are not exploited. To that 

end, three critical areas requiring further attention remain.47

Technology Controls and Control List Harmonization.

The vast majority of Asian countries still do not have adequate 

technology controls in place. With only Japan and South Korea 
11

being members of the multilateral export control arrangements, 

coordinating national export control systems with international 

norms is a problem. For example, as of late 2001, 7 out of 17 countries 

had no or only partial controls over the export or transit of sensitive 

technologies.48 One country does not have controls on items from 

any of the multilateral lists, while another does not control goods 

on the NSG and Australia Group lists. A third country has no legal 

controls on dual-use equipment that could be used for chemical 

weapons (CW) and biological weapons (BW). Finally, while another 

maintains no formal controls on the items on the Chemical Weapons 

Convention (CWC) schedules or on biological weapons, it does 

control CW- and BW-related dual-use equipment. Furthermore, the 

majority of surveyed countries lack national control lists that reflect 

those of the four multilateral export control regimes. However, a few 

countries, such as Singapore, are in the process of harmonizing their 

control lists (see Table 3). 

Goods Technology

Arms, Nuclear/ Dual-use items 

BCW Missile 

Related item

Brunei Yes Yes No

Cambodia Yes Partial No

China Yes Partial Yes

Hong Kong, China Yes Yes Yes

Indonesia Partial Partial No

Japan Yes Yes Yes

Korea Yes Yes Yes

Laos Partial Partial Yes

Macau, China Yes Yes Yes

Malaysia Partial Partial No

Mongolia Partial Partial Partial

Myanmar Yes Partial Partial

Philippines Partial No No

Singapore Partial Partial No

Chinese Taipei Yes Partial Partial

Thailand Yes Partial Yes

 Viet Nam Yes Partial Partial

Table 3. Scope of Control, 2002.
12

While an important exercise, the harmonization of national control 

lists for regime nonmembers need not be an exacting process. An 

emerging trend in the practice of export controls is the move to 

so-called “activity-based” controls from the purely control list 

approach.49

1. The control-list approach focuses on the nature of the product 

or technology itself, and regulates export through product 

control lists. Typically, under this approach, an exporter first 

determines whether its product is covered by the product list 

and, if so, then consults the product list to determine what 

restrictions, if any, apply to the export of the product. 

2. The activity-based approach, by contrast, focuses on the 

nature of the transaction and the identity of the exporter and 

its partners in the deal. It is not limited to an examination of 

the specific product being shipped. The purpose of an activitybased approach is to control certain dangerous activities, 

such as the proliferation of nuclear or chemical weapons or 

the advancement of terrorist organizations. 

 As the nature of the proliferation threat becomes geographically 

boundless, the role of activity-based controls has become increasingly significant as a mechanism for enforcing export control policy. 

Studies have indicated that proliferant countries often seek threshold 

or decontrolled technology for their WMD programs.50 Furthermore, 

the events of September 11, 2001, have accelerated this changing 

trend in, for example, U.S. export control legislation. The “bad 

guys” are no longer limited to a particular country.51 As a result, all 

transactions, even those that seem purely domestic, and transactions 

in “friendly countries,” now fall under the scope of export control 

laws. Countries, therefore, must have the ability to control exports 

irrespective of list content. This flexibility has otherwise caused a 

catch-all clause, a tool not readily in abundance in the Asian region. 

Catch-All Controls.

National control systems focus on the end-use and end-user of 

goods and technologies, allowing more freedom to transfer dual-
13

use technologies to commercial end-users for commercial end-uses. 

Post-Gulf War disclosures of the operational means of Iraqi front 

companies furthered the spread of catch-all. Heightened concerns 

over terrorist acquisition of WMD components and technologies 

highlight the preventative role offered by catch-all legislation. 

 A “catch-all” regulation is the means by which governments apply 

existing national export control procedures to goods and technologies 

not on national control lists when it is known or suspected that such 

goods of technologies will be used in WMD programs. This type of 

regulation is also known as “end use” regulation, because it requires 

that exporters ensure that their exports of dual-use products have 

legitimate end uses.52

 Japan, for example, amended two cabinet orders to introduce a 

catch-all control in December 2001. The new regulation came into 

force in April 2002. Under the new control, the export of items which 

are not included in the export control list requires export license of 

the items that are for use in connection with WMD and their delivery 

means. To ensure the effectiveness of the catch-all clause, the 

Ministry of Economy, Trade and Industry (METI) provides exporters 

the “End User List” that indicates end users of proliferation concern. 

South Korea also enacted a catch-all clause in early 2003. 

 With respect to China, officials believe they have the authority 

and already have implemented catch-all controls for several kinds 

of nonproliferation items. Moreover, the Ministry of Foreign Trade 

and Economic Cooperation (MOFTEC) can restrict both nuclear and 

nuclear dual-use items that do not appear on the list.53 Allegedly, 

officials also interpret catch-all controls to permit restrictions on email and fax transfers of technology. Officials indicate, however, that 

they need assistance in devising means to control these intangible 

forms of technology transfer effectively. In contrast, at least one 

source claimed that the government must put chemical items on 

the list before they can exercise controls, although the regulations 

would then allow officials to restrict a host of associated production 

equipment and technologies. Although the central government 

appears to have the authority to use catch-all controls, the process 

for implementing these controls seems ambiguous.54

 Apart from Japan and South Korea, the majority of reporting 

Asian states either lack completely or do not have multilateral 
14

export control regime standard catch-all control regulations. 

This characteristic is further reinforced by the relative absence of 

information that regional governments provide their exporters and 

transportation industries on end users and entities of concern. With 

the exception of a few countries, regional governments―to the extent 

they provide any export control-related information―share only the 

minimal amount of information, usually pertaining to compliance 

requirements. The functional essence of the catch-all regulation is 

a greater responsibility on behalf of industry to ensure that end use 

and end user are in no way illicit. Yet, industry must be adequately 

informed. 

Reexport and Transshipment Controls.

Another way to maximize the ability to administer and enforce 

export controls is to focus international monitoring and enforcement 

efforts on major chokepoints in the flow of global commerce. A 

significant amount of global trade passes through a handful of major 

transshipment hubs―most of which are in the Asia region―that 

serve as key distribution points in the global economy. For example, 

the equivalent of more than 50 million containers a year has passed 

through the major ports of Southeast Asia in recent years.55

 Such hubs potentially could be used by terrorists or countries 

of concern to divert sensitive items to unauthorized destinations or 

end users. Tighter national export controls and greater international 

cooperation have made direct access to items more difficult for end 

users of proliferation concern. Proliferators increasingly are likely 

to use transit points in unsuspecting destinations to conceal the 

real nature of the transaction. They falsify cargo descriptions, do 

not enter end-user/user destinations, hide the final destination, use 

front companies, and try other ruses.56

 Most of the countries surveyed do not have legislation covering 

re-exports or transshipment controls. This relative deficiency is 

perhaps the most serious export control challenge, in light of the fact 

that most countries are―in proliferation terms―not suppliers but 

transshipment points, whose economies depend on the efficiencies 

and speed of trade facilitation. Compounding matters is the relative 

proximity of key technology suppliers, such as Japan and South 
15

Korea.57 For example, according to a Tokyo Metropolitan Police 

Department press release, authorities arrested the former managing 

director of the Ryokasha Company and Hitachi for conspiring to sell 

telecomparators to China.58 The sale of telecomparators is in violation 

of a Japanese law established by the Nuclear Suppliers Group in 

1992. This device can be modified to develop an apparatus for the 

extraction of weapons grade plutonium. The company allegedly 

used South Korea as a transshipment point to avoid Japanese 

export controls to its final destination in Harbin, China. According 

to the police investigation, 3 months after 18 telecomparators were 

shipped to Harbin in December 1996, the Ryokosha company sent 

technicians to offer assistance and to repair the products.59

 Another case involved Singapore as a transshipment point. In 

May 2001, U.S. Customs Special Agents in Baltimore initiated an 

investigation based on a referral made by the Defense Security 

Service which alleged that a U.S. national was attempting to 

acquire sophisticated encryption technology and related data for 

illegal export to the PRC. The technology is controlled for export 

under the U.S. Munitions List of the International Trafficking in 

Arms Regulations and by the National Security Agency. Based 

on the referral, an undercover investigation was initiated, and the 

perpetrators were arrested for attempting to unlawfully export the 

encryption devices to the PRC via Singapore.60

 Addressing the 2002 Southeast Asian regional forum on 

transshipment controls in Bangkok, the State Department’s Bureau 

of Nonproliferation, Director of the Office of Export Control 

Cooperation John Schlosser, remarked: 

State sponsors of terrorism and terrorist organizations increasingly are 

attempting to exploit the less-stringent controls that exist in the world’s 

transshipment hubs―often by diverting legitimate trade or through front 

companies posing as honest brokers. Unless transshipment countries―

like those you represent here today―catch up with these supplier states 

and similarly strengthen their export control systems, they will remain 

an attractive target for this kind of predatory trade.61

 With notable exceptions, the export control systems of Asia are 

resource poor. While overall progress in export control development 

is evident, individual discrepancies continue to pose threats to 
16

regional and international security.62 As noted above, increasing 

economic integration and interdependence creates a natural base 

upon which to develop regional export control resources and greater 

coordination, although, until 1997, the region was slow to pursue 

collective responses to regional public goods problems.

A REGIONAL RESPONSE: 

THE EUROPEAN UNION CASE AS MODEL

Export controls combine trade and security policy; to this extent, 

regional economic integration and harmonization presume some 

degree of security policy cooperation. An instructive model for 

future regional export control developments is the European Union 

(EU).63

 As a consequence of increasingly harmonized trade policy, 

the EU eventually addressed the issue of a common framework 

for the export of dual-use and goods and technologies from the 

community in the 1990s. Presently, the 15 member states operate 

under a common control list and set of export guidelines (e.g., such 

as an EU-level catch-all clause requirement), recognize a common 

license, regularly share licensing and enforcement information, and 

are subject to compliance reviews. In addition, until the year 2000, 

an EU member state easily could grant an export license for an 

item for which the authorities of another member state had refused 

authorization. Under a new regulation, such undercutting can 

provoke considerable peer pressure. Member states now have to 1) 

inform each other on denials of export licenses; 2) consult with each 

other on their intention to undercut; and, 3) explain their decision 

to do so.64 The EU is also coordinating members state export control 

assistance to the 10 inductees. 

 In Asia, the concept of “comprehensive” or “integrated” security, 

which would include nonproliferation export control efforts, initially 

was championed by Japan in the late 1970s.65 It was developed further 

by ASEAN in the 1980s. In the 1990s, when China made increasing 

use of the concept, it gained even wider currency throughout Asia. 

Throughout most of the Asia region, the Asian financial crisis of 1997 

has reinforced further the belief that security must be understood 

in “comprehensive” terms that go beyond traditional military 
17

connotations.66 Similarly, the regional terrorist threat has galvanized 

calls for regional threat management.67

 ASEAN, established initially as a trade and development 

forum, has, in fact, sought to coordinate regional nonproliferation 

efforts. ASEAN has hosted seminars on nonproliferation and 

initiated the 1995 Treaty on the Southeast Asia Nuclear WeaponsFree Zone (Bangkok Treaty). Recently, Japanese trade minister 

Shoichi Nakagwa called on Japan and ASEAN to tighten export 

controls jointly on materials for WMD as an effort to fight against 

terrorism.68

 The Asia-Pacific Economic Council (APEC) also has begun to 

address the link between trade and security. The first major meeting 

of APEC for 2004 provided encouragment for member nations to 

sign on to international nonproliferation treaties.69 In addition, 

APEC members agreed to a series of joint actions to ensure that 

key Pacific Rim infrastructure in the areas of trade, finance, and 

information systems is protected by “Enhancing Secure Trade in the 

APEC Region (STAR),” which includes calls for greater coordination 

on container, aviation, and transit security. 

 While such economic organizations as ASEAN and APEC are by 

no means the organizational equivalents of the EU, they can provide 

a framework for the creation of many of the export control norms, 

best practices and information sharing functions.70 For example, 

these organizations could host seminars on transshipment controls 

involving regional governments and freight forwarding, customs 

brokers, and the shipping industry―in addition to serving as 

information sharing platforms on end users of concern. Such services 

would reduce the institutional costs to national governments while 

increasing awareness of key export control issues. 

 Beyond supplying export control resources to and facilitating 

the coordination of policy of area governments, a regional 

solution also should be sought regarding informing and assisting 

industry.71 Government outreach to industry represents one of the 

least developed aspects of national export controls in Asia. While 

Japan’s METI, for example, collaborates with a nongovernmental 

organization, the Center for Information on Security Trade Control, 

to work with industry in developing compliance programs, other 

states do not have similar programs. A regional solution also would 
18

include ways and means by which to assist regional governmental 

outreach efforts to industry, an aspect otherwise lacking from 

ASEAN or APEC agendas.

 On the basis of further economic regionalization, a regional 

solution is the most appropriate means to address the respective 

export control deficiencies. In spite of that, such an outcome depends 

entirely on strong leadership and support. The United States has 

provided a great deal of bilateral export control assistance to many 

states in the region. For example, the U.S. Department of Commerce 

recently launched the Transshipment Country Export Control 

Initiative (TECI).72 Perhaps more importantly, Japan has been 

providing such leadership and support for the past decade. Given the 

accelerated export control developments in China, Beijing should be 

encouraged to seek broader regional coordination on export control 

issues. At the 2003 ASEAN summit, for example, China proposed 

the establishment of a new security mechanism. Under the rubric of 

the ASEAN Regional Forum (ARF), the organization’s mechanism 

for security discussions, Chinese Foreign Minister Li Zhaoxing 

proposed forming a conference to increase communication among 

Asian militaries. In addition, Japan and China hosted their first 

joint export control seminar in Beijing on March 5, 2004, for Chinese 

firms.73

CONCLUSION: THE FUTURE OF EXPORT CONTROLS 

IN THE ASIAN REGION

When compared with supplier state export control systems such 

as the United States and Japan, most states in the region have only 

the most rudimentary of control systems. That being said, however, 

regional governments have been making progress on addressing 

systematic deficiencies on a voluntary and, more importantly, a 

cooperative basis. To sustain this progress, participating states must 

understand that export controls are not impediments to trade. On 

the contrary, they are the prerequisites for ensuring the necessary 

international and regional stability and technology transfer on 

which economic development and growth depend. 

 As Asia develops into a clearly demarcated economic “region,” 

it is confronted by similar export control challenges as those faced 
19

in Europe with the advent of the Common Market. As such, a 

regional system of export control standards and practices emerged 

as a means to ensure not only economic parity, but also regional and 

international security. While not necessarily as advanced in terms of 

regional identity as the European free trade area, the states of Asia 

could profitably benefit from a regional approach to export control 

development and coordination. 

 To help facilitate export control developments in Asia, U.S. 

leadership and resources are essential. To meet this objective, the 

United States should pursue the following:

 • Provide export control resources and training. Since the 

early 1990s, the U.S. Government has provided these for the 

countries of the former Soviet Union. Such assistance is now 

required in the Asia region. Bilateral export control cooperative 

programs are now in the offing with countries like Singapore 

and China. Working with regional nonproliferation leaders 

like Japan, the United States must expand the scope of its 

export control programs to include countries with fledgling 

trade control systems, such as Malaysia. 

 • Hold China to its nonproliferation commitments. In May 2004, 

China joined the Nuclear Suppliers Group, thereafter seeking 

entry into the Missile Technology Control Regime (MTCR). 

China’s recent domestic and international export control 

developments must be matched against a marked change 

in behavior. The United States must serve as guarantor that 

Beijing will adhere to its growing battery of nonproliferation 

commitments, as Chinese inaction could undermine export 

control developments made elsewhere in the region. 

 • Expand Asian involvement in the Proliferation Security 

Initiative (PSI) and Container Security Initiative (CSI). PSI 

and CSI are responses to the growing challenge posed by the 

proliferation of WMD, their delivery systems, and related 

materials worldwide. Greater Asian participation in both 

programs is necessary for their collective success. 
20

 • Foster and sustain political support. As countries in the 

region further develop their respective export control 

capacities―especially China―on-going U.S. support will be 

critical to achieving this end. While financial and intellectual 

support is fundamental to this task, political and diplomatic 

support will be required to ensure that domestic political 

endorsement for these undertakings remains high. 

 Above all, the abiding export control challenge for any 

government is identifying, then striking, the proper balance between 

trade and security. In this respect, it is critical that export controls are 

not viewed as impediments to trade. The nexus of trade and security 

cuts to the heart of the matter in Asia, where national economies 

depend greatly on trade, as they do on regional and international 

security. The internal challenge for countries of the Asia region is 

to develop systems compatible with their political, economic, and 

security needs while addressing the overall threat posed by the 

proliferation of WMD.
21

ENDNOTES

1. Al-Qaeda is alleged to have experimented with procedures for making 

blister, mustard, nerve, sarin, and VX chemical agents. Furthermore, while some 

observers point optimistically to the decline in the number of international terrorist 

incidents during the 1990s as an especially noteworthy and salutary development 

in the struggle against terrorism, at the same time the proportion of persons killed 

in terrorist incidents has paradoxically increased. See Bruce Hoffman, “Terrorism 

and Weapons of Mass Destruction: An Analysis of Trends and Motivations,” 

RAND Document P-8039, 1999, pp. 44-50. See also John Parachini, “Putting WMD 

Terrorism into Perspective,” The Washington Quarterly, Vol. 26, No. 4, Autumn 

2003.

2. As post-Gulf War national and international investigations revealed, Iraq 

purchased―either directly or through front companies―the majority of materials and 

technologies needed for its various weapons programs. U.S. officials maintained 

that Iraq, prior to March 2003, accelerated its quest for nuclear weapons and 

had embarked on a worldwide hunt for materials to make an atomic bomb. Iraq 

sought to buy thousands of specially designed aluminum tubes, which American 

officials believe were intended as components of centrifuges to enrich uranium. 

See Michael Gordon and Judith Miller, “U.S. Says Hussein Intensifies Quest for 

A-Bomb Parts,” The New York Times, September 8, 2002. Preliminary reports on 

Pakistan’s role in a worldwide nuclear proliferation network indicate that a wide 

array of legitimate commercial channels was employed to transfer sensitive goods 

and technologies. See Kamran Khan, “Pakistanis Exploited Nuclear Network: 

Iran, Libya Aided Via Black Market, Investigation Finds,” The Washington Post, 

January 28, 2004; and David E. Sanger and Raymond Bonner, “A Tale of Nuclear 

Proliferation: How A Pakistani Built His Network,” The New York Times, February 

12, 2004.

3. Technology and Security in the 21st Century: U.S. Military Export Control Reform, 

Washington, DC: Center for Strategic and International Studies (CSIS), 2001; Study 

Group on Enhancing Multilateral Export Controls For U.S. National Security: Final 

Report, April 2001; The Henry L. Stimson Center and Defense Science Board Task 

Force on Globalization and Security, Final Report, Washington, DC: Office of the 

Under Secretary of Defense for Acquisition and Technology, December 1999.

4. For the purposes of this monograph, “Asia region” is defined as Australia, 

Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, 

Pakistan, People’s Republic of China, Democratic People’s Republic of Korea, 

Philippines, Taiwan, Republic of Korea, Singapore, Sri Lanka, Thailand, and 

Vietnam. India and Pakistan were not included as most scholarship on Asian 

regionalization does not treat them. Generally, they are treated, in security terms, 

as a relatively unique dyad. For export control studies on Indian and Pakistan, see 

Seema Galhaut and Anupam Srivastava, “Curbing Proliferation from Emerging 

Suppliers: Export Controls in India and Pakistan,” Arms Control Today, September 

2003; and Seema Galhaut, “India,” in Michael Beck, Richard Cupitt, Seema Gahlaut, 
22

and Scott Jones, eds., To Supply or To Deny: Nonproliferation Export Controls in Five 

Key Countries, New York: Kluwer, 2003.

5. Asian countries are frequently targets of proliferation acquisition activities. 

For example, see “Iran Denies Seeking to Buy Missile Technology from Japanese 

Firm,” Agence France Presse, June 16, 2003.

6. See Richard Cupitt, “Nonproliferation Export Controls in East Asia,” The 

Journal of East Asian Affairs, Vol. 11, No. 2, Summer/Fall 1997, pp. 452-480. 

7. See Scott A. Jones, “Current and Future Challenges for Asian 

Nonproliferation Export Controls,” East Asian Review, Vol. 15, No. 2, Summer 

2003.

8. The literature on what constitutes regionalism or a region is extensive. Not 

only is it contested, but an important process in Asia has been changing views on, 

or understandings of, what constitutes the Asian region, for substantive economic 

and security reasons and for narrower political reasons. An excellent overview is 

found in Andrew Hurrell, “Explaining the Resurgence of Regionalism in World 

Politics,” Review of International Studies, Vol. 21, 1995, pp. 331-358. See also Edward 

A. Mansfield and Helen V. Milner, eds., The Political Economy of Regionalism, New 

York: Columbia University Press, 1998. An examination of the “regionalist” 

dynamic in Asia is found in Peter J. Katzenstein, “Regionalism and Asia,” New 

Political Economy, Vol. 5, No. 3, 2000, pp. 353-368.

9. World Trade Organization, International Trade Statistics 2002, http://

www.wto.org/english/res_e/statis_e/its202_e/its02_toc_3.htm.

10. According to the U.S. Customs, over 200 million cargo containers per year 

move between these ports. http://www.customs.gov/xp/cgov/newsroom/highlights/csi/.

11. Trade statistics culled from the World Trade Organization’s web site. 

12. In 1977, bilateral trade amounted to $77 million. It is now over several 

billion per year. M. Dutta, Economic Regionalization in the Asia-Pacific: Challenges to 

Economic Cooperation, Cheltenham: Edward Elgar Publishing, 2000. See also Greg 

Mastel, “WTO Means more than Trade to China,” Journal of Commerce, April 28, 

2000.

13. “New Approaches to Trade and Investment Policies in Asia and the 

Pacific,” United Nations Economic and Social Commission for Asia and the Pacific 

(UNESCAP), ESCAP Secretariat, Trade and Investment Division, Occasional 

Papers, 2001, http://www.unescap.org/itid/publication/chap2_2126.pdf.

14. Glenn Hook, et al., “Japan and the East Asian Financial Crisis: Patterns, 

Motivations and Instrumentalization of Japanese Regional Economic Diplomacy,” 

European Journal of East Asian Studies, Vol. 1, No. 2, 2002. 

15. As a consequence of the 1997 financial crisis, the finance ministers of 

ASEAN+3 countries (China, Japan, and South Korea) reached agreement on 

the “Chiang Mai Initiative,” which was the first significant regional financing 

arrangement to enable countries to cope with disruptive capital flows and maintain 
23

exchange rate stability. The Chiang Mai Initiative has contributed to improving 

exchange rate stability and in doing so may also have contributed to closer 

regional economic and financial integration. Eiji Ogawa, “Monetary Integration 

in East Asia,” The Journal of East Asian Affairs, Vol. 15, No. 2, Fall/Winter 2001, pp. 

344-365. See also “Asian Multilateral Institutions and Their Response to the Asian 

Economic Crisis: The Regional and Global Implications,” The Pacific Review, Vol. 

13, No. 3, 2000, pp. 495-516.

16. Richard Stubbs, “ASEAN Plus Three: Emerging East Asian Regionalism?” 

Asian Survey, Vol. 42, No. 3, 2002. 

17. Byeong Hae Sohn, “Regionalization of Trade and Investment in East Asia 

and Prospects for Further Regional Integration,” Journal of the Asia Pacific Economy, 

Vol. 7, No. 2, 2002. 

18. “Pipe Dreams,” Economist, January 20, 2001.

19. Interestingly, these negotiations in the sale and distribution of energy have 

fostered greater cooperation on issues of naval security. As the Strait of Malacca is 

among the world’s busiest sealanes, China’s rising exports and increasing demand 

for oil have led its navy and its diplomats to pay more attention to the region’s 

shipping lanes and the accessibility of the region’s ports. Since 1998, Beijing has 

stepped up its diplomacy toward old foes, Cambodia and Vietnam, both of which 

possess key ports. For example, in November 2000 Jiang Zemin made the first visit 

by a Chinese leader to Phnom Penh in 37 years. One month later, Jiang signed 

a historic agreement with Vietnam that resolved disputed borders. In return 

for courting these two Southeast Asian states, Beijing hopes to gain access to 

Vietnam’s Cam Ranh Bay port and Cambodia’s Sihanoukville port. China has also 

boosted naval ties with Thailand and Burma.

20. See Joshua Kurlantczick, “Is East Asia Integrating?” The Washington 

Quarterly, Vol. 24, No. 4, Autumn 2001, pp. 19-28.

21. The regional cooperation and integration literature traditionally has been 

dominated by neorealist and institutionalist approaches. They have a number 

of differences, but they also share common assumptions: they focus primarily 

on cooperation between states, although some institutionalist approaches 

acknowledge that nonstate actors may facilitate cooperation among nations, and 

they do not problematize what actually constitutes a region. If we acknowledge 

that the region is best viewed as lived social space, then we need approaches that 

also highlight regional actors and their political, socioeconomic and sociocultural 

projects―views absent in the orienting presumptions of both theories. One such 

approach is Neumann’s “region building approach.” See Iver B. Neumann, “A 

Region-Building Approach,” in Fredrik Soderbaum and Timothy M. Shaw, eds., 

Approaches to the New Regionalism, London: Palgrave, 2002. See also James J. Hentz 

and Morten Bøas, eds., New and Critical Security and Regionalism: Beyond the Nation 

State, London: Ashgate, 2003. 

22. This high level of military spending was curtailed somewhat by the Asian 

economic crisis, which resulted in overall reductions in government expenditures 
24

as well as currency depreciation that made some arms imports prohibitively 

expensive. Still, even though the strong growth in Asian military expenditures 

slowed, overall expenditures have still not started to decline even in East Asia, 

which was most affected by the economic crisis. While the volume of arms 

procurement has been scaled down significantly due to the reduced purchasing 

power of these governments’ currencies, the domestic burden of the military 

expenditure is not declining. 

23. In Southeast Asia, most nations have relatively small military budgets 

and small armed forces; but here, too, imports or major weapons and military 

spending are on the rise, contributing to the increased militarization of the AsiaPacific region.

24. SIPRI Year Book 2002: Armaments, Disarmaments, and International Security, 

Stockholm: SIPRI, 2002.

25. See Joseph Cirincione, “The Asian Nuclear Reaction Chain,” Foreign Policy, 

Spring 2000. 

26. North Korea began its development of ballistic missiles by reverseengineering Soviet-made Scud Bs. The Soviet Union, however, did not supply 

Scud-type missiles to North Korea. In the late 1970s, North Korea acquired a 

number of Scud Bs from Egypt in return for its assistance to Egypt during the 1973 

Yom Kippur War. Seung-Ho Joo, “Military Relations between Russia and North 

Korea, The Journal of East Asian Affairs, Vol. 15, No. 2, Fall/Winter 2001, pp. 297-

323.

27. The Democratic People’s Republic of Korea (DPRK) also stands accused 

of exporting nuclear technology to the gas centrifuge enrichment plant in Natanz, 

Iran. Glenn Kessler, “Iran’s Nuclear Program Speeds Ahead,” The Washington Post, 

March 10, 2003.

28. Unclassified Report to Congress on the Acquistion of Technology Relating 

to Weapons of Mass Destruction and Advanced Conventional Munitions, July 1 

Through December 31, 2001, Office of the Director of Central Intelligence, http://

www.cia.gov/cia/publications/bian/bian_jan_2003.htm. In particular, for Washington, 

the North Korean missile problem has proved to be even more vexing since it 

also has to take into consideration South Korea’s overall response strategies and 

the fallout from pursuing a regional Theater Missile Defense (TMD) system. In 

response to North Korea’s accelerated missile programs, South Korea has insisted 

that it should be able to develop medium-range missiles with the capability to hit 

most targets in North Korea. Although the United States agrees in principle to 

South Korea’s proposal that it should have, in response, the leeway to develop its 

own missile arsenal with a range up to 300 km, Washington is concerned that such 

a move could fuel a new arms race in the region. China is keenly concerned about 

a U.S.-sponsored TMD archipelago running from Taiwan to South Korea. See 

Don Kirk, “U.S. and Japan to Join in Missile Defense to Meet Pyongyang Threat,” 

International Herald Tribune, July 29, 1999; and Andrew Browne, “China Says US 

Missile Defense Plan ‘Last Straw’,” Taiwan Security Research, March 5, 1999.
25

29. On February 24, North Korea fired an anti-ship cruise missile into the Sea 

of Japan, upstaging the inauguration of South Korean President Roh Moo-hyun, 

who has vowed to push for unconditional reconciliation toward the communist 

neighbor. Seoul Defense Minister Cho Young-kil said North Korea conducted 

the missile test several months earlier than scheduled as part of a “brinkmanship 

tactic” aimed at pressing for two-way security negotiations with the United States. 

Cho has warned North Korea against further “dangerous” military maneuvers 

that could bring “serious consequences” to the peninsula, referring to the earlier 

missile test and the March 2, 2003, interception of a U.S. spy plane by North Korean 

jet fighters. North Korea reacted angrily to Seoul’s warning by saying “irrational 

acts” would lead to returning inter-Korean relations to a state of confrontation. 

Howard French, “North Korea Tests a Missile as South Korea Prepares for a New 

President,” The New York Times, February 25, 2003.

30. Bertil Lintner, “North Korean Companies and Commercial Activities in 

Southeast Asia,” Jane’s Consultancy, paper presented at the 11th Asian Export 

Control Seminar, October 18-20, 2003, Tokyo, Japan.

31. For example, China promised to abide by the Missile Technology Control 

Regime (MTCR) in 1991-92 and reaffirmed that commitment in an October 4, 1994, 

statement. Also, China acceded to the Nuclear Nonproliferation Treaty (NPT) on 

March 9, 1992. China signed the Chemical Weapons Convention (CWC) in January 

1993. In November 1995, China issued its first public defense white paper, which 

focused on arms control and disarmament. On May 11, 1996, the PRC issued a 

statement promising to make only safeguarded nuclear transfers. China, on July 

30, 1996, began a moratorium on nuclear testing and signed the Comprehensive 

Test Ban Treaty (CTBT) in September 1996 but, like the United States, has not 

ratified it. On April 25, 1997, China deposited its instrument of ratification of the 

CWC before it entered into force on April 29, 1997. Premier Li Peng issued new 

nuclear export control regulations on September 10, 1997. On October 16, 1997, 

China joined the Zangger Committee on nuclear trade. Finally, China issued 

regulations on dual-use nuclear exports on June 17, 1998.

32. Director of Central Intelligence (DCI), Unclassified Report to Congress 

on the Acquisition of Technology Relating to Weapons of Mass Destruction and 

Advanced Conventional Munitions, July-December 1996 (June 1997), see http:

//www.fas.org/irp/cia/product/wmd.htm. Subsequent reports have noted China’s 

improving nonproliferation policy and behavior. However, problems remain. 

For instance, in the most recent Report, the DCI observed: “Over the past several 

years, Beijing improved its nonproliferation posture through commitments 

to multilateral arms control regimes, promulgation of export controls, and 

strengthened oversight mechanisms, but the proliferation behavior of Chinese 

companies remains of great concern.” See Unclassified Report to Congress on 

the Acquisition of Technology Relating to Weapons of Mass Destruction and 

Advanced Conventional Munitions, 1 January Through 30 June 2003 (http://

www.cia.gov/cia/reports/721_reports/jan_jun2003.htm).
26

33. Shirley Kan, “China’s Proliferation of Weapons of Mass Destruction and 

Missiles: Current Policy Issues Updated July 1, 2002,” Issue Briefs for Congress, 

Congressional Research Service, The Library of Congress. See also Jing Dong 

Yuan, “The Evolution of China’s Nonproliferation Policy since the 1990s: 

Progress, Problems, and Prospects,” Journal of Contemporary China, Vol. 11, No. 31, 

pp. 209-233; and Yuzo Murayama, “China’s Export Control Policy in East Asian 

Context: Implications from Economic Perspectives,” paper presented at the Sixth 

ISODARCO Beijing Seminar on Arms Control, October 29-November 1, 1998, 

Shanghai, China. 

34. On December 3, 2003, China’s State Council published a new White Paper 

on Nonproliferation. In contrast to previous white papers, including the 1995 White 

Paper on Arms Control and Disarmament, this document is low on rhetoric and 

focuses on documenting recent concrete steps in China’s nonproliferation policy. 

A discussion of China’s new export control regulations takes up more than half 

of the paper. This new White Paper gives a clear indication of progress on China’s 

nonproliferation thinking. Although Chinese Premier Wen Jiabao’s visit to the 

United States influenced the timing of the White Paper’s release, many within 

China’s export control community have pushed for increased transparency on 

these issues for some time. Chinese export control officials have argued for the 

last year that their system is improving and that Beijing is taking proliferation 

issues seriously. By publishing this White Paper, Beijing is telling the international 

nonproliferation community, and particularly the United States, that their efforts 

are worth noting. A copy of the White Paper is available at http://www.nti.org/db/

china/engdocs/nprolwp_03.htm. See also Evan S. Medeiros and M. Taylor Fravel, 

“China’s New Diplomacy, Foreign Affairs, November-December 2003. 

35. Mike Narkter, “China Seeks to Join Nuclear Suppliers Group,” Global 

Security Newswire, January 27, 2004. In addition, a Statement of Intent was signed 

in Beijing between the U.S. Department of Energy and the China Atomic Energy 

Authority (CAEA) on January 12, 2004. The agreement establishes a process 

for cooperation with each other and for collaborating with the International 

Atomic Energy Agency (IAEA) on a range of nuclear nonproliferation and 

security activities. These activities include efforts to strengthen export controls,

international nuclear safeguards, physical protection of nuclear materials and 

facilities, nuclear emergency management, and radioactive source security 

by setting up information exchanges and training programs. See “Security 

Cooperation Agreement Signed with U.S.,” Nuclear News, March 2004.

36. In addition to Jemaah Islamiah, similar groups include the Abu Sayyaf 

Group and Moro Islamic Liberation Front in the Philippines and the Kumpulan 

Militan Malaysia in Malaysia.

37. Regarding the emerging trend of radicalized religious groups and 

WMD use, noted terrorism expert Bruce Hoffman argues that “the growth of 

religious-inspired terrorism has already contributed to international terrorism’s 

increasing lethality and also that many of the constraints (both self-imposed and 

technical) that previously prevented terrorist use of WMD are eroding as well. In 
27

this respect, the different characteristics, justifications, and mindsets of religious 

and quasi-religious―as compared to secular terrorists―suggest that religiousinspired terrorists will be the most likely nonstate perpetrators to use WMD.” 

Bruce Hoffman, “Terrorism and WMD: Some Preliminary Hypotheses,” The 

Nonproliferaiton Review, Spring/Summer 1997, pp. 45-53.

38. See Richard Cupitt, S. Grillot, and Y. Murayama, “Determinants of 

Nonproliferation Export Controls: A Membership-Fee Explanation,” The Nonproliferation Review, Vol. 8, No. 2, Summer 2001, pp. 69-80.

39. Japan joined COCOM in 1952 and adopted Import Certificate/Delivery 

Verification (IC/DV) system that was similar to the ones adopted by other 

COCOM countries and adhered strictly to COCOM rules, such as implementing 

controls over re-exports and end-user checks. In 2001, Japan enacted catch-all 

legislation. 

40. An enhanced application of ODA with respect to export control assistance 

recently was initiated. Tokyo is in the process of ranking Asian countries’ export

control policies and differentiating them in terms of ODA support. The ranking 

system will rate aid-receiving countries into four groups according to their 

export control development: 1) systems roughly similar to Japan’s; 2) developing 

systems; 3) primitive systems; and 4) countries without functioning systems. The 

government will calibrate its export control assistance accordingly. See “Japan to 

Tighten Export Controls to Asia to Prevent Arms Proliferation,” BBC Monitoring 

Asia-Pacific, published in Yomiuri Shimbun, January 5, 2004.

41. Security Export Control Council, Industrial Structure Committee, 

Ministry of International Trade and Industry, The Future of Security Export Controls, 

Tokyo, March 25, 1993, pp. 1-3. Based on this recommendation, Japan launched 

its “Asian Export Control Initiative” to promote and coordinate the adoption of 

nonproliferation export controls in the region. The Japanese Industrial Structure 

Council reported that “[r]einforcing export controls . . . to achieve world peace is 

an area in which it is most appropriate for Japan to play a role commensurate with 

its status as a major economic power” and that “appropriate export controls on 

dual-use items” are important in meeting the proliferation threat.

42. COCOM, established in 1949, was used by the major Western industrial 

powers to impose restrictions on the transfer of militarily useful technology 

to the Soviet bloc. At the time of its elimination, COCOM was by far the most 

comprehensive export control mechanism dealing with “dual-use” technologies―

items which have both commercial and military applications. Dual-use transfers 

are of particular concern in stemming the spread of capabilities for the production 

of the full spectrum of weapons systems, from small arms to major conventional 

systems to weapons of mass destruction.

43. “Japan, H.K., Singapore Plan WMD Export Curbs,” Daily Yomiuri, January 

8, 2004.

44. Jason Leow, “China’s Weapons Sales Rules Could Be Double-Edged 

Sword,” The Straits Times, August 30, 2002.
28

45. Chuang Peck Ming, “Bill Tightens Control Over Exports of Strategic 

Goods,” The Business Times Singapore, November 26, 2002.

46. Throughout the 1990s, Libya had been able to purchase hundreds of 

millions of dollars’ worth of nuclear parts, including advanced centrifuges 

designed in Pakistan, from a firm in Malaysia, with a free-trade zone in Dubai 

serving as the main shipping point. It was a new development in an old arms 

race: Malaysia, a high-tech nation with no indigenous nuclear ambitions, was 

retailing sophisticated nuclear gear, based on designs made available by Pakistani 

nuclear scientist A. Q. Khan. Seymour Hersh, “Why is Washington Going Easy 

on Pakistan’s Nuclear Black Marketeers?” The New Yorker, March 8, 2004. See also 

David Crawford, “Supply Chain: How the Pakistani Nuclear Ring Managed to 

Skirt Export Laws,” The Wall Street Journal, March 23, 2004.

47. Center for Information on Strategic Technologies, “Questionnaire on 

Export Control Systems in Asian Countries and Regions,” Tokyo, Japan, March 

2003. The authorities surveyed included Brunei, Cambodia, China, Hong Kong, 

Indonesia, Japan, Laos, Macao, Malaysia, Mongolia, Myanmar, the Philippines, 

South Korea, Taiwan, Thailand, Singapore, and Vietnam. The data that follow 

come from this survey. 

48. Surveys conducted since 1999 indicate little development in controls over 

strategic technologies, especially regarding controls over so-called “intangible 

transfers of technology.” 

49. Richard Sako and Louis Lambert, “The Changing Face of Export 

Controls: How the War on Terrorism is Affecting Corporate Export Compliance 

Obligations,” Legal Media, July 2002, http://www.legalmedia.net.

50. Yuan, Jing-Dong, “The Future of Export Controls: Developing New 

Strategies for Nonproliferation,” International Politics, Vol. 39, No. 2, June 2002. 

51. See Joseph Cirincione, “Global Trends,” in J. Cirincione, Deadly Arsenals: 

Tracking Weapons of Mass Destruction, Washington DC: Carnegie Endowment for 

International Peace, 2002, pp. 3-25.

52. At its annual meeting in Paris on June 6, 2002, the Australia Group agreed 

to adopt a new set of formal guidelines on licensing exports of sensitive items. 

Two of the most important provisions in the new set of guidelines are the noundercut and catch-all provisions. The catch-all provision directs Australia Group 

members to license exports of materials that could be used to develop biological or 

chemical weapons, even if the specific item is not identified on the group’s control 

lists. Exporters must also alert authorities if they are aware that unlisted items 

are meant for a biological or chemical weapons program. This is the first time 

that an export control regime has agreed to include a catch-all clause in its public 

guidelines. 

53. Similarly, China has indicated that it will apply special “scrutiny and 

caution” on missile-related exports to those countries developing nuclear-capable 

ballistic missiles, even if the items do not appear on the control list.
29

54. For a comprehensive study of the Chinese export control system, see 

Richard T. Cupitt, “China,” in M. Beck, R. Cupitt, S. Galhaut, and S. Jones, eds., To 

Supply or To Deny: Nonproliferation Export Controls in Five Key Countries, New York: 

Kluwer Law International, 2003.

55. Karen Bhatia, Deputy Undersecretary for Industry and Security, Remarks 

at the Regional Forum on Transshipment Controls, December 12, 2002, Bangkok, 

Thailand, http://www.bxa.doc.gov/press/2002/Bhatia@BanqkokForum.html.

56. For example, John Bolton, Undersecretary of State for Arms Control and 

International Security, noted that “The whole administration is focusing more 

on transshipment countries,” especially those in Asia. William Neal, “Export 

Controls: U.S. Pushes Out the Borders,” National Journal, December 30, 2002. 

57. Following a recent investigation, the South Korean Ministry of Commerce, 

Industry, and Energy concluded that a company it identified only by its initial 

(D) shipped four balancing machines to a Middle Eastern country, according to 

officials. In December, the International Atomic Energy Agency (IAEA) found the 

Korean-made machines during nuclear inspections of Libya. Balancing machines, 

used to balance centrifuges, are listed as strategic materials requiring government 

permission for export by the NSG. It is the second time a South Korean company 

has been charged with exporting NSG-controlled strategic materials. In October, 

the government filed a complaint against a local company (identified as W) on 

similar charges. “ROK Government Accuses Domestic Firm of Exporting WMDRelated Equipment to Libya,” Seoul Yonhap, February 11, 2004.

58. A telecomparator is a precision manufacturing device that is accurate to 

the 0.2 micrometer.

59. According to Ryokosha spokesman Teruhito Koizumi, it had known the 

machines sold to a South Korean agent were going to China, but the company 

was assured that the proper applications to export the telecomparators would be 

processed. The spokesman also said the company realized it was a mistake to send 

personnel to offer assistance to the end user. See F. J. Khergamvala, “Japan Detects 

Export of Nuke Products to China,” The Hindu, February 9, 1999.

60. Statement of Richard Mercier, Executive Director for Investigative 

Programs, Office of Investigations, U.S. Customs Service, Before the U.S.-China 

Commission, January 17, 2002, http://usinfo.state.gov/regional/ea/uschina/mercier.htm.

61. William New, “Export Controls: United States Pushing Out the Borders,” 

National Journal, December 30, 2002.

62. Malaysia’s involvement, albeit inadvertent, in supplying Libya with 

nuclear enrichment components is a case in point. See “U.S. Envoy Urges Malaysia 

to Improve Its Export Rules,” Associated Press, March 2, 2004.

63. The processes of regional integration in non-European parts of the world 

have not yet been studied meticulously. There are basically two main reasons for 

this. First, the existing literature on regional integration generally has focused 

on the process of European integration. Second, the studies on the processes of 
30

integration in non-European parts of the world largely have been conducted 

in isolation from the contributions of the studies on European integration. 

An excellent study is Christopher Dent and David Huang, Northeast Asian 

Regionalism―Learning from the European Experiences, London: Routledge, 2002.

64. See Burkhart Schmitt, “A Common European Export Policy for Defense 

and Dual-Use Items?” Occasional Paper 25, Institute for Security Studies, Western 

European Union, May 2001; Panos Koutrakos, “The Reform of Common Rules 

on Exports of Dual-Use Goods under the Law of the European Union, European 

Journal of Law Reform, Vol. 2, No. 2, Spring 2000; Report to the European Parliament 

and the Council on the application of regulation (EC) 3381/94 setting up a Community 

system of export controls regarding dual-use goods (Com, 98), Brussels, May 1998; 

and Proposal for a Council Regulation setting up a Community regime for the control of 

exports of dual-use goods and technology, COM(1998), 98/0162, ACC, prepared by the 

Commission.

65. Muthiah Alagappa, ed., Asian Security Practice: Material and Ideational 

Influences, Stanford: Stanford University Press, 1998.

66. Nobuo Okawara and Peter J. Katzenstein, “Japan and Asian-Pacific 

Security: Regionalization, Entrenched Bilateralism and Incipient Multilateralism,” 

The Pacific Review, Vol. 14, No. 2, 2001, pp. 165–194. See also Bertil Lintner, 

“North Korean Companies and Commercial Activities in Southeast Asia,” Jane’s 

Consultancy, paper presented at the 11th Asian Export Control Seminar, October 

18-20, 2003, Tokyo, Japan.

67. A somewhat critical, but nevertheless informative, view of regional antiterrorism cooperation is found in David Jones and Mike Smith, “From Konfrontasi 

to Disintegrasi: ASEAN and the Rise of Islamism in Southeast Asia,” Studies in 

Conflict & Terrorism, Fall 2002, pp. 343-356.

68. “Japan, ASEAN to Meet on WMD Proliferation Export Controls,” Kyodo 

News Service, February 6, 2004.

69. On the “fungibility” of regional organizations to adopt new issue areas, 

see Mark Beeson, “Reshaping Regional Institutions: APEC and the IMF in East 

Asia,” The Pacific Review, Vol. 12, No. 1, 1999, pp. 1-29.

70. Jürgen Haacke, “Collective Foreign and Security Policy: The Emergence 

of an ASEANized Regional Order in East Asia?” London School of Economics 

Department of International Relations, International Studies Association Annual 

Meeting, Minneapolis, MN, March 1998.

71. The growing sophistication of WMD-related technologies and expansion 

of global trade have taxed the control and monitoring capabilities of national 

export control systems. In addition, the inclusion of the catch-all clause in national 

export control systems worldwide has accelerated the necessity of developing 

industry outreach programs, as the obligation of the exporter now extends beyond 

published control lists. Consequently, export control strategies now emphasize 

the enhanced responsibility of industry in preventing the spread of WMD-related 

goods and technologies.
31

72. The announcement of the TECI program was made at the Southeast Asian 

Conference on Trade Security in Bangkok, Thailand, in December 2002. The TECI 

program works alongside another U.S. export control program, the Container 

Security Initiative (CSI). The initiative is designed to enhance security of the sea 

cargo container. One of the core elements of CSI involves placing U.S. Customs 

inspectors at major foreign seaports, such as Singapore and Hong Kong, to prescreen cargo containers before they are shipped to America. U.S. Customs officials, 

working with their foreign counterparts, will be in a position to detect potential 

WMD in U.S.-bound containers at these foreign ports.

73. The seminar was attended by division chief-level officials from ministries 

and agencies of the two governments including the Ministry of Economy, Trade 

and Industry (METI) and people from about 100 companies in China. Export 

managers from Japanese electric appliance manufacturers served as lecturers. 

They taught how to monitor products that may possibly be used for producing 

nuclear weapons, biological and chemical weapons, and missiles. “Japan, PRC 

To Cooperate in Export Control To Prevent WMD Proliferation,” Sankei Shimbun, 

March 5, 2004.

33

APPENDIX I

ACQUISITION CASE STUDY:

NORTH KOREAN COMPANIES AND COMMERCIAL 

ACTIVITIES IN SOUTHEAST ASIA1

In line with directives issued by North Korea’s Ministry of the People’s 

Armed Forces and Bureau 39 of the Korean Workers’ Party, North Korean 

embassies and trading companies in Southeast Asia have been mobilized 

to raise hard currency for the state and the party. Next to the Middle 

East, where North Korea is making vast amounts of money from its trade 

in ballistic missiles and missile technology, Southeast Asia is the most 

important place for the North Koreans to do business. In brief, the North 

Koreans are raising money and conducting their businesses in the region 

in the following five different ways.

1. DPRK Embassies.

The embassies themselves import duty free cars, liquor, perfume, 

and cigarettes, which they sell on the black market. This is the practice, 

especially in Thailand, whose laws are not always as forcefully enforced as 

is the case in, for instance, Singapore and Malaysia. Money raised in this 

manner most probably is used to finance the operations of the embassies, 

as they have been told to be self-sufficient, and they do not receive enough 

funding from Pyongyang. In early 2001, fake U.S.$100 notes also turned 

up in Bangkok. One of the North Korean diplomats there was caught redhanded trying to deposit the forgeries in a local bank.

2. DPRK Trading Companies.

Connected with the embassies, but not part of them, is a maze of 

supposedly privately-owned trading companies. In Thailand, for instance, 

a company which is officially registered as Kosun Import-Export and 

permitted to trade in rice, rubber, paper, tapioca, and clothing, also owns 

an eight-story building in Bangkok and is involved in property. It rents out 

flats and office space in the building it owns. Money earned in this manner 

is used to finance the embassy in Bangkok, and to support the regime in 

Pyongyang.
34

3. DPRK Defense Technology Transfer.

Other North Korean-trading companies in Southeast Asia―mainly in 

Thailand, Singapore, and Hong Kong―have been set up with the specific 

purpose of obtaining technology for North Korea’s defense industries. In 

the past, much of this technology could be obtained in Japan through the 

Chosen Soren, but stricter controls by Japanese authorities have prompted 

the North Koreans to look elsewhere for electronic goods produced by 

Japan and other countries. Since this activity is of a more clandestine 

nature than more ordinary trading carried out by companies such as 

Kosun, they carefully disguise the location and nature of the company 

in question. One such company in Bangkok is Kotha Trading (KoreaThailand). It has one North Korean shareholder―the managing director of 

the company―who carries a diplomatic passport from North Korea. The 

others are “sleeping” Thai partners. According to the Thai companies’ 

registry, it is supposed to be dealing in ceramics. But first, the address 

at which it is officially registered―an office block not far from the North 

Korean embassy in Bangkok―is not where its actual office is located. That 

is more than two kilometers away in another office block where it shares 

facilities with three or four Thai electronics companies. Kotha Trading is 

connected with a world-wide network of North Korean trading companies 

that are procuring spare parts and components for North Korea’s defense 

industries, including its ballistic missile programs. Goods are shipped 

either directly to North Korea, or indirectly through China. Similar 

companies also operate in Hong Kong and Singapore. There are about a 

dozen North Korean Trading Companies in Hong Kong, and about the 

same number in Singapore.

4. Proxy Companies.

Because of restrictions in Japan, Japanese goods destined for North 

Korea are often rerouted through countries such as Thailand. In November 

last year, for instance, a company in Tokyo called Meishin, which is owned 

by local businessmen connected with the Chosen Soren, first attempted to 

export three power-control devices to North Korea. But when the Japanese 

authorities refused to issue an export license, the three devices were 

disguised as something else and sent to Bangkok. The recipient in Bangkok 

was not a North Korean-owned company―which would have been too 

suspicious―but a perfectly legitimate Thai company, Loxley Pacific, one 

of Thailand’s leading telecommunications firms. But Loxley also has an 

investment in North Korea where it is installing a mobile phone system.
35

 In this case, the goods never reached North Korea. They were seized 

by customs in Hong Kong, where the ship stopped on its way to Bangkok, 

because the documents accompanying the power-control devices were 

not in order. In converted use, these power-control devices can be used 

in the production of WMD. Loxley, however, claimed that “The electricity 

situation is poor in North Korea . . . they need stabilizers to avoid hurting 

their household appliances.” A less than likely explanation, but it shows 

how the North Koreans are also using third-party middlemen to get the 

goods they require to North Korea.

5. Direct Procurement and Acquisition.

 The fifth area of activity is even more intriguing as it is characterized 

by direct procurement and acquisition of controlled materials. In Thailand, 

a North Korean-owned company, Wolmyongsan Progress Joint Venture, 

was engaged for years in mining activities near the Burmese border in 

western Thailand. It is unclear what minerals it was mining, and if it 

was to sell them to make money, or use them in North Korea’s defense 

industries. But Thai sources suspect they were looking for uranium and 

other strategic minerals. Wolmyongsan is no longer active in Thailand, 

but another North Korean mining company has been detected in Laos, a 

communist-run state with close relations to North Korea. The company, 

Chosun-Lao Seok Hoisa (in Korean: “the Korea-Laos Stone Company”), is 

said to be mining for tin at four locations around Sup Sitae near Hinboun 

in Khammouane province. However, it may also be looking for other more 

strategic minerals. In recent months, North Korean mining specialists have 

also been spotted at a location 7 kms south of Taunggyi in the Shan State of 

Burma. The cooperation with Burma is new, as relations between the two 

countries were broken after North Korean agents placed a powerful bomb 

in Rangoon in 1983, killing several visiting South Korean government 

ministers.

ENDNOTE

 1. Study is derived wholly from Bertil Lintner, “North Korean Companies and 

Commercial Activities in Southeast Asia,” Jane’s Consultancy, paper presented at 

the 11th Asian Export Control Seminar, October 18-20, 2003, Tokyo, Japan. Please 

do not cite without author’s approval.