U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

89–011 2001

107th Congress, 1st Session – – – – – – – – – – – – – House Document 107–93

A REPORT TO THE CONGRESS ON

EXECUTIVE ORDER 12938

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

A REPORT ON EXECUTIVE ORDER 12938, AS REQUIRED BY SECTION 204 OF THE INTERNATIONAL EMERGENCY ECONOMIC

POWERS ACT AND SECTION 401(c) OF THE NATIONAL EMERGENCIES ACT, PURSUANT TO 50 U.S.C. 1703(c) AND 50 U.S.C.

1614(c)

JULY 10, 2001.—Message and accompanying papers referred to the

Committee on International Relations and ordered to be printed

(1)

To the Congress of the United States:

Enclosed is a report to the Congress on Executive Order 12938,

as required by section 204 of the International Emergency Economic Powers Act (50 U.S.C. 1703(c)) and section 401(c) of the National Emergencies Act (50 U.S.C. 1641(c)).

GEORGE W. BUSH.

THE WHITE HOUSE, June 28, 2001.

(3)

REPORT TO CONGRESS ON THE EMERGENCY REGARDING THE

PROLIFERATION OF WEAPONS OF MASS DESTRUCTION

Weapons of mass destruction (WMD) (nuclear, chemical, and biological weapons) and their missile delivery vehicles are among the

top threats to U.S. security in the post-Cold War world. In the

hands of countries like Iran, Iraq, Libya, and North Korea, these

weapons pose direct threats to U.S. forces and citizens overseas

and to our friends and allies abroad. WMD already poses a threat

to U.S. territory via terrorism and unconventional delivery means,

and some countries of concern are already working on intercontinental-range missiles that would be able to deliver WMD against

our territory directly.

Since taking office in January 2001, my Administration has

given high priority to dealing with the threat of WMD and missile

proliferation. These issues figure prominently in a number of policy

reviews (e.g., concerning North Korea), as well as in the Administration’s reexamination of U.S. deterrence strategy and force posture.

WMD and missile nonproliferation measures undertaken by the

United States between November 2000 and May 2001 are the subject of this report. In November 1994, in light of the dangers of the

proliferation of WMD and of the means of delivering such weapons,

President Clinton issued Executive Order No. 12938, declaring a

national emergency under the International Emergency Economic

Powers Act (50 U.S.C. 1701 et seq.). Under section 202(d) of the

National Emergencies Act (50 U.S.C. 1622(d)), the national emergency terminates on the anniversary date of its declaration unless,

within the 90-day period prior to each anniversary date, the President publishes in the Federal Register and transmits to the Congress a notice stating that such emergency is to continue in effect.

The national emergency was extended on November 14, 1995; November 12, 1996; November 13, 1997; November 12, 1998; November 10, 1999; and November 12, 2000.

The following report is made pursuant to Section 204(c) of the

International Emergency Economic Powers Act (50 U.S.C. 1703(c))

and Section 401(c) of the National Emergencies Act (50 U.S.C.

1641(c)). It reports actions taken and expenditures incurred pursuant to the emergency declaration during the period November 12,

2000 through May 15, 2001. Additional information on nuclear,

chemical, and biological weapons (CBW) and missile nonproliferation efforts is contained in the most recent annual Report on the

Proliferation of Missiles and Essential Components of Nuclear, Biological and Chemical Weapons. This report was provided to Congress pursuant to Section 1097 of the National Defense Authorization Act for Fiscal Years 1992 and 1993 (Public Law 102–190), also

known as the ‘‘Nonproliferation Report.’’ Additional information in

this regard is also contained in the most recent annual report pro-
4

vided to the Congress pursuant to Section 308 of the Chemical and

Biological Weapons Control and Warfare Elimination Act of 1991

(Public Law 102–182), also known as the ‘‘CBW Report.’’ On July 28, 1998, in E.O. 13094, President Clinton amended section 4 of E.O. 12938 to broaden the type of proliferation activity

that can subject entities to potential penalties under the Executive

Order. The original Executive Order provided for penalties for contributions to the efforts of any foreign country, project or entity to

use, acquire, design, produce, or stockpile chemical or biological

weapons; the amended Executive Order also covers contributions to

foreign programs for nuclear weapons and for missiles capable of

delivering weapons of mass destruction. Moreover, the amendment

expands the original Executive Order to include attempts to contribute to foreign proliferation activities, as well as actual contributions, and broadens the range of potential penalties to expressly include the prohibition of United States Government assistance to

foreign persons, and the prohibition of imports into the United

States and United States Government procurement. In sum, the

amendment gives the United States Government greater flexibility

in deciding how and to what extent to impose measures against foreign persons that assist proliferation programs.

NUCLEAR WEAPONS

Since their May 1998 nuclear tests, India and Pakistan have

openly pursued their respective nuclear weapon programs. They

have continued production of fissile material for nuclear weapons

and have flight-tested nuclear-capable ballistic missiles. Their continued production of weapons-grade fissile material coupled with

possession of fighter aircraft capable of delivering nuclear weapons

gives both India and Pakistan the ability today to conduct a nuclear exchange. Flight testing of nuclear capable ballistic missiles

by both countries raises the prospect that more sophisticated and

possibly destabilizing capabilities will be fielded in the coming

years. We have sought to persuade New Delhi and Islamabad that

open-ended nuclear and missile competition in South Asia would

adversely affect both the subcontinent and other regions. We have

pressed for restraint, especially to not deploy nuclear weapons or

nuclear-capable ballistic missiles.

Since the mandatory imposition of U.S. statutory sanctions, we

have worked unilaterally, with other P–5 and G–8 members, with

the South Asia Task Force (SATF), and through the UN to urge

India and Pakistan to move toward the international nonproliferation mainstream. Support for international sanctions by other

countries continues to attenuate, however.

We have supported calls by the P–5 and G–8, and UN Security

Council on India and Pakistan to take a broad range of concrete

actions designed to prevent a costly and destabilizing nuclear arms

and missile race, with possible implications beyond the region. During the Clinton Administration, the United States focused most intensely on several objectives that it thought could be met over the

short and medium term: an end to nuclear testing and adherence

to the Comprehensive Nuclear-Test Ban Treaty (CTBT); constructive engagement in negotiations on a Fissile Material Cutoff Treaty

(FMCT) and, pending its conclusion, a moratorium on production of
5

fissile material for nuclear weapons and other nuclear explosive devices; restraint in the development of nuclear-capable missiles, particularly non-deployment; and adoption of controls meeting international standards on exports of sensitive materials and technology.

Intensive high-level U.S. dialogues with Indian and Pakistani officials yielded only modest progress, principally on export controls.

Indian and Pakistani leaders reaffirmed their countries’ testing

moratoria, declared in the wake of the tests. Indian Prime Minister

Vajpayee announced during his visit to Washington in September

2000 that India would maintain its moratorium until CTBT entered into force. Pakistan’s leaders have said Pakistan will not be

the first to test.

India and Pakistan both withdrew their opposition to negotiations on an FMCT in Geneva at the end of the 1998 Conference on

Disarmament session, and negotiations got underway for a brief

time. However, these negotiations were unable to resume in 1999

or 2000 due to a deadlock over the negotiating mandate.

Some progress was achieved in bringing Indian and Pakistan export controls, while non-specific, but generally effective, into closer

conformity with international standards. In April 2000, India instituted new, more specific regulations on many categories of sensitive non-nuclear equipment and technology, and has said that nuclear-related regulations will be forthcoming. In July 2000, Pakistan publicly announced regulations restricting nuclear exports and

has indicated that further measures are being prepared. Both countries’ steps still fall short of international standards, however. We

have begun with India a program of technical cooperation designed

to improve the effectiveness of its already extensive export controls,

and to encourage further steps to bring India’s controls in line with

international standards. Similar assistance to Pakistan is prohibited by coup-related sanctions.

The summer 1999 Kargil conflict and the October 1999 military

take-over in Pakistan resulted in the suspension of the Indo-Pakistani bilateral dialogue begun at Lahore. Tensions remain high,

particularly over insurgent attacks in Kashmir. India unilaterally

suspended offensive military operations in Kashmir in November of

2000, and India and Pakistan have all but ceased artillery barrages

across the line of control.

My Administration has an active review underway of U.S. nonproliferation related sanctions policy toward South Asia. The results of that review will be discussed in the November 2001 version

of this report.

In October 1994, the United States and the Democratic People’s

Republic of Korea (DPRK or North Korea) signed an Agreed

Framework which, if fully implemented, will ultimately result in

Pyongyang’s full compliance with the International Atomic Energy

Agency (IAEA) safeguards agreement, Under the Agreed framework, as it has been interpreted to date, the DPRK is not required

to come into full compliance with its IAEA safeguards agreement

until a significant portion of the light water reactor project is completed, but must do so before the delivery of key unclear components. As a first step, North Korea froze construction and operations at its declared nuclear facilities at Yongbyon and Taechon.
6

The freeze remains in place and is monitored by the IAEA, which

has maintained a continuous presence at the Yongbyon site since

1994.

The United States and DPRK have also cooperated in the canning of spent fuel from the North’s 5 megawatt nuclear reactor.

Canning of all accessible spent fuel rods and rod fragments was

completed in April 2000. The IAEA continues to monitor the

canned fuel and has confirmed that any remaining rod fragments,

which are currently inaccessible, do not represent a proliferation

concern. The U.S. spent-fuel team regularly returns to the DPRK

to continue clean-up operations and to look at maintenance.

The Agreed Framework bars the DPRK from constructing any

new graphite-moderated reactors or related facilities, including reprocessing plants. United States identification in mid-1998 of an

underground site near Kumchang-ni in North Korea, which was

suspected of being nuclear-related, led to an arrangement providing

for U.S. access to the site as long as U.S. suspicions remained. On

the basis of visits to the facility in May 1999 and May 2000, the

United States concluded that the site as then configured was not

suited to house a nuclear reactor or reprocessing operations and

therefore was not a violation of the Agreed Framework. The U.S.-

DPRK Joint Communique issued in October 2000, following the

visit of DPRK Special Envoy Jo Myong Rok to Washington, stated

that ‘‘U.S. concern’’ about Kumchang-ni had been ‘‘removed.’’ In

that document, both sides pledged to ‘‘redouble their commitment

and their efforts to fulfill their respective obligations in their entirety under the Agreed Framework.’’ The DPRK also reaffirmed its

ballistic missile flight test moratorium.

In March 2001, I met with ROK President Kim Dae-Jung. The

resulting joint statement reaffirmed the commitment of the United

States and the ROK to continue the 1994 Agreed Framework, while

calling on North Korea ‘‘to join in taking the needed steps for its

successful implementation.’’ Subsequently, in March 2001, My Administration began a full review of U.S. policy toward North Korea,

with the purpose of determining the nature of any future U.S. dialogue with North Korea. My Administration is taking into account

the views of key allies as it proceeds with the ongoing review. The

results of the review will be discussed in the November 2001

version of this report.

The Nuclear Non-Proliferation Treaty (NPT) is the cornerstone of

the global nuclear nonproliferation regime. The April-May 2000

NPT Review Conference (REVCON) concluded successfully and provided an important boost to the NPT and to nuclear nonproliferation goals in general. In the Fall of 2000, the REVCON outcome

was reinforced at the UN General Assembly and at the General

Conference of the IAEA. The United States continued to pursue

policies aimed at advancing the goals of the NPT, particularly

those related to compliance with the Treaty’s nonproliferation obligations. In March 2001, the United States met with other NPT Depository Governments (UK and Russia) in Geneva to discuss the

procedural steps necessary to begin the review process leading to

the next Conference of NPT Parties in 2005.

The IAEA attempts to verify states’ compliance with their safeguards agreement pursuant to their NPT obligations. The discovery
7

at the time of the Gulf War of Iraq’s extensive covert nuclear activities led to an international consensus in favor of strengthening

the IAEA safeguards system’s ability to detect undeclared nuclear

material and activities. The United States and a large number of

like-minded states negotiated in the mid-1990s substantial safeguards strengthening measures, including the use of environmental

sampling techniques, expansion of the classes of nuclear activities

states are required to declare, and expansion of IAEA access rights.

Measures requiring additional legal authority are embodied in a

Model Additional Protocol approved in 1997. This Protocol has now

been signed by 55 states and has entered into force for 19 countries. Provided the IAEA is given the resources and political support it needs to implement its new safeguards measures effectively,

proliferators who have ratified the Additional Protocol will likely

find it harder to evade the system. However, to date, no country

of concern/proliferator has adopted the Protocol.

The purpose of the 35-nation Nuclear Non-Proliferation Treaty

(NPT) Exporters (Zangger) Committee is to harmonize implementation of the Non-Proliferation Treaty’s requirement to apply IAEA

safeguards to nuclear exports. Article III.2 of the Treaty requires

parties to ensure that IAEA safeguards are applied to exports to

non-nuclear weapon states of (a) source or special fissionable material, or (b) equipment or material especially designed or prepared

for the processing, use or production of special fissionable material.

The Committee maintains and updates a list (the ‘‘Trigger List’’) of

equipment that may only be exported if safeguards are applied to

the recipient facility. The relative informality of the Zangger Committee has enabled it to take the lead on certain nonproliferation

issues that would be more difficult to resolve in the Nuclear Suppliers Group (NSG).

As its October 2000 meeting, the Committee discussed the results of the 2000 NPT REVCON. The Committee agreed to form

two informal ‘‘Friends of the Chair’’ groups to: (1) consider preparations for the 2005 NPT REVCON; and (2) continue consideration of

possible future adoption of a policy of requiring full-scope safeguards as a condition of supply to non-nuclear weapon states. At

the meeting, members also agreed that the materials americium

and neptunium fell outside the scope of NPT Article III.2 for inclusion on the Trigger List, but no agreement was reached on the consideration of adding plutonium enrichment equipment to the Trigger List.

All of the NPT nuclear weapon states, including China, are members of the Zangger Committee. However, unlike all of the other

nuclear weapon states, China is not a member of the NSG, which

requires its members to adhere to a policy of requiring non-nuclear

weapon states to accept IAEA full-scope safeguards as a condition

of supply. China has been reluctant to agree to this policy.

With 39 member states, the NSG is a widely accepted and effective export-control arrangement, which contributes to the nonproliferation of nuclear weapons through implementation of guidelines for control of nuclear and nuclear-related exports. Members

pursue the aims of the NSG through adherence to the Guidelines,

which are adopted by consensus, and through exchanges of information on developments of nuclear proliferation concern.
8

Slovenia became the newest member of the NSG in October

2000. NSG members sometimes allow non-member nations deemed

eligible for NSG membership to participate in Plenary meetings as

observers. While not a NSG member, China has taken a major step

toward harmonization of its export control system with the NSG

Part 2 Guidelines by the implementation of controls over nuclearrelated dual-use equipment, material, and related technology.

A special meeting was held in Vienna in December 2000 on the

issue of Russian nuclear supply to India. The United States and

more than 30 other NSG members expressed strong concern over

the proposed Russian supply of fuel to the Tarapur reactors. NSG

members overwhelmingly agreed that such supply clearly does not

qualify for the safety exemption to the NSG full scope safeguards

policy and thus not only would seriously undercut the NSG Guidelines but also the global nuclear nonproliferation regime. Despite

this, the Russians have made clear that they intend to proceed

with the Tarapur transfer anyway, and we anticipate this issue

will continue to be discussed at future NSG meetings.

In April 2001, the NSG Implementation Working Group reached

ad referendum agreement on proposed procedures including responsibilities of the Plenary, Chair, Consultative Group, and Point

of Contact as well as procedures for consideration of new members,

consultations, and amendment of the guidelines. Russia introduced

a proposal to accord ‘‘associate membership’’ to certain countries

which have not accepted IAEA full-scope safeguards but have nuclear weapons programs. Discussion has been deferred until the

May 2001 Plenary.

CHEMICAL AND BIOLOGICAL WEAPONS (CBW)

The export control regulations issued under the Expanded Proliferation Control Initiative (EPCI) remain fully in force and continue to be administered by the Department of Commerce, in consultation with other agencies, in order to control the export of

items with potential use in chemical or biological weapons or unmanned delivery systems for weapons of mass destruction.

Chemical weapons (CW) continue to pose a very serious threat

to our security and that of our allies. On April 29, 1997, the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (the

Chemical Weapons Convention or CWC) entered into force with 87

of the CWC’s 165 States Signatories as original States Parties, including the United States, which ratified on April 25, 1997. Russia

ratified the CWC on November 5, 1997, and became a State Party

on December 8, 1997. As of the end of this reporting period, 143

countries have become States Parties.

The implementing body for the CWC, the Organization for the

Prohibition of Chemical Weapons (OPCW), was established on

April 29, 1997. The OPCW, located in The Hague, is comprised of

States Parties and international civil servants that are responsible

for implementing the CWC. The OPCW consists of the Conference

of the States Parties, the Executive Council (EC), and the Technical Secretariat (TS). The TS carries out the verification provisions of the CWC, and presently has a staff of approximately 500,

including about 200 inspectors trained and equipped to inspect
9

military and industrial facilities throughout the world. To date, the

OPCW has conducted over 940 routine inspections in some 48

countries. No challenge inspections have yet taken place. The

OPCW maintains a permanent inspector presence at operational

U.S. CW destruction facilities in Utah and elsewhere. Accordingly,

approximately 70 percent of the inspection days have been at U.S.

declared facilities.

The United States is determined to seek full implementation of

the concrete measures in the CWC designed to raise the costs and

risks for states or other entities attempting to engage in chemical

weapons-related activities. Receiving accurate and complete declarations from all States Parties will improve our knowledge of possible chemical weapons-related activities. The CWC’s inspection

provisions provide for access by international inspectors to declared

and potentially undeclared facilities and locations, thus making

clandestine chemical weapons production and stockpiling more difficult, more risky, and more expensive.

The Chemical Weapons Convention Implementation Act of 1998

was enacted into U.S. law on October 21, 1998, as part of the Omnibus Consolidated and Emergency Supplemental Appropriation

Act for Fiscal Year 1999 (P.L. 105–277). The Clinton Administration issued Executive Order 13128 on June 25, 1999, and Presidential Decision Directive/NSC–70 on December 17, 1999 to facilitate implementation of the Act and the Convention. Regulations regarding declarations and inspections of industrial facilities were

published on December 30, 1999. The United States commenced its

submission of industry declarations at the end of April 2000, and

hosted its first industry inspection on May 8, 2000. Industry inspections continue with excellent support from affected companies.

Our submission of the industry declarations to the OPCW and commencement of inspections have strengthened U.S. leadership in the

organization as well as our ability to encourage other States Parties to make complete, accurate, and timely declarations.

Countries that refuse to join the CWC are increasingly isolated

politically and denied access by the CWC to certain key chemicals

from States Parties. The relevant treaty provisions are specifically

designed to penalize countries that refuse to join the rest of the

world in eliminating the threat of chemical weapons.

The United States agreed in 1994 to participate in an Ad Hoc

Group to negotiate a Protocol to the 1972 BWC that would ‘‘enhance confidence in compliance.’’ Negotiations continued during the

reporting period. My Administration is in the late stages of a comprehensive review of U.S. policy toward the BWC protocol exercise.

The United States continues to be a leading participant in the

32-member Australia Group (AG) chemical and biological weapons

(CBW) nonproliferation regime. The United States attended the

most recent annual AG Plenary Session from October 2–5, 2000,

during which the Group reaffirmed the members’ continued collective belief in the AG’s viability, importance and compatibility with

the CWC and BWC. Members continue to agree that full adherence

to the CWC and BWC by all governments will be the only way to

achieve a permanent global ban on chemical and biological weapons and that all states adhering to these Conventions must take

steps to ensure that their national activities support these goals. At
10

the 2000 Plenary, the Group welcomed its newest members, Cyprus

and Turkey. The regime continued to focus on strengthening and

refining AG export controls and sharing information to address the

CBW threat, including from terrorism. The AG also reaffirmed its

commitment to continue its active outreach program of briefings for

non-AG countries, and to promote regional consultations on export

controls and nonproliferation to further awareness and understanding of national policies in these areas. The AG discussed ways

to be more proactive in stemming attacks on the AG in the CWC

and BWC contexts.

During the last six months, we continued to closely examine intelligence and other information of trade in CBW-related material

and technology that might be relevant to sanctions provisions

under the Chemical and Biological Weapons Control and Warfare

Elimination Act of 1991. No new sanctions determinations were

reached during this reporting period. The United States also continues to cooperate with its AG partners and other countries in

stopping shipments of proliferation concern.

MISSILES FOR DELIVERY OF WEAPONS OF MASS DESTRUCTION

The United States continues to carefully control exports that

could contribute to unmanned delivery systems for weapons of

mass destruction, and to closely monitor activities of potential missile proliferation concern. We also continue to implement U.S. missile sanctions laws.

On November 21, 2000, the United States determined that Chinese entities engaged in transfers of missile-related equipment and

technology to Iran and Pakistan are sanctionable under U.S. law.

As mandated by U.S. law, the United States imposed MTCR Category I missile sanctions on the Iranian and Pakistani entities involved. The United States waived sanctions against the participating Chinese entities in consideration of China’s November 21,

2000 commitment not to assist other countries in developing nuclear-capable ballistic missiles in any way and to put in place comprehensive export controls. However, this waiver does not apply to

any sanctionable transfers that occur after November 21, 2000. We

are continuing to monitor this situation closely and will press

China for full implementation of its November 21 commitments.

In January 2001, pursuant to the Iran Nonproliferation Act of

2000, the United States imposed missile sanctions on a North Korean entity for its involvement in the transfer from North Korea

to Iran of missile equipment and technology controlled by the

MTCR Annex.

During this reporting period, the Missile Technology Control Regime (MTCR) Partners (members) continued to share information

about proliferation problems with each other and with other potential supplier, consumer, and transshipment states. Partners also

emphasized the need for implementing effective export control systems. This cooperation has resulted in the interdiction of missilerelated materials intended for use in missile programs of concern.

In addition, the Partners reached consensus to admit the Republic

of Korea to membership in the MTCR, effective March 26, 2001.

The United States strongly supported this decision and believes

ROK membership will strengthen the Regime. The ROK has been
11

committed since 1995 to controlling missile-related exports consistent with the MTCR Guidelines and Annex, and has a demonstrated track record of implementing such controls. In addition,

the ROK committed in January 2000 not to possess MTCR Category I offensive military missiles. With the admission of the ROK,

MTCR membership now stands at 33.

As agreed at the October 2000 Helsinki MTCR Plenary, the

MTCR Partners held a Reinforced Point of Contact (RPOC) meeting in Paris in March 2001 to discuss next steps on the draft International Code of Conduct Against Ballistic Missile Proliferation

(ICOC), intended to become a new multilateral mechanism that

would complement the MTCR and eventually include the participation of all interested countries, both MTCR and non-MTCR. The

MTCR Partners agreed to continue their national and regional efforts to multilateralize the draft ICOC, including by Poland holding

a round table meeting for several non-members in Warsaw in May,

and to intensify their efforts to obtain non-Partner support for, and

reaction to, the draft ICOC text. They also agreed to decide at the

September 24–28 Ottawa MTCR Plenary whether and when to

hold an international conference for the official launching of the

ICOC.

In preparation for the Ottawa Plenary, the Partners also agreed

to hold a special meeting for licensing and enforcement officers in

conjunction with the Regime’s annual Information Exchange. The

United States strongly supports this decision. Having such a meeting will further strengthen the Partners’ efforts to cooperate on

stopping or impeding specific shipments of missile proliferation

concern.

During this reporting period, the United States continued to

work unilaterally and in coordination with its MTCR Partners to

combat missile proliferation and to encourage non-members to export responsibly and to adhere to the MTCR Guidelines. Since the

last report, the United States continued holding missile nonproliferation dialogues with China and raising with Indian and

Pakistani leaders our continuing strong interest in this issue. In

the course of normal diplomatic relations, we also have pursued

such discussions with other countries in Central Europe, South

Asia, and the Middle East.

Although regular discussions with Pakistan at the expert level

have not proceeded since the Fall 1999 coup, we remain engaged

at the diplomatic level and continue to address our nonproliferation

concerns. On November 21, 2000, the United States Government

imposed missile sanctions on the Pakistani Ministry of Defense and

the Space and Upper Atmosphere Research Commission

(SUPARCO) for their knowing engagement in missile proliferation

activities with Chinese entities. We have indicated we are prepared

to discuss with Pakistan the nonproliferation conditions under

which a waiver might be warranted.

As noted in the previous report, former Secretary Albright met

with Chairman Kim Jong-Il in Pyongyang October 23–24, 2000.

They discussed the full range of U.S. concerns on missiles, including both the DPRK’s indigenous missile programs and exports.

They also explored Chairman Kim’s idea of restraining DPRK missile capabilities in exchange for launches of DPRK satellites on for-
12

eign boosters. Following up on the Secretary’s discussions, the

United States and DPRK held the sixth round of missile talks in

Kuala Lumpur November 1–3, 2000. The talks covered the full

range of missile issues under consideration by the two countries

and were useful in clarifying positions. However, significant issues

remained to be resolved.

No further dialogue between the United States and DPRK has

taken place since the November 2000 round of talks. My Administration is currently undertaking a thorough review of U.S. policy

vis-a`-vis the DPRK on this and other key issues related to the Korean Peninsula. My Administration will carefully consider its options, taking into account the views of key allies before deciding

whether and how to proceed.

In May, a European Union delegation visited Pyongyang and met

with DPRK leader Kim Jong-I1. During those meetings, Kim informed the delegation that he would extend North Korea’s missile

launch moratorium until 2003. (North Korean officials subsequently linked continuation of the moratorium to Bush Administration policy toward Pyongyang.) Kim also commented, however, that

North Korea would continue to export missiles and related technology.

In response to Iranian efforts to acquire sensitive items from

Russian entities for use in Iran’s missile and nuclear development

programs, the United States has pursued a high-level dialogue

with Russia aimed at finding ways to work together to cut off the

flow of sensitive goods to Iran’s ballistic missile development and

nuclear weapon programs. Russia’s Government has created institutional foundations to implement a newly-enacted nonproliferation

policy and passed laws to punish wrongdoers. It also has passed

new export control legislation to tighten government control over

sensitive technologies and continued working with the United

States to strengthen export control practices at Russian aerospace

firms.

In April 2000, the United States announced its intention to lift

the administrative penalties imposed on the Russian entities Inor

and Polyus in July 1998 for their missile-related cooperation with

Iran. They were removed on November 17, 2000. However, penalties imposed in July 1998 against five other Russian entities and

in January 1999 against three additional entities remain in effect.

Consistent with the Russian Government’s April 2000 announcement of administrative action against the Rector of the Baltic State

Technical University (BSTU) for his involvement in training Iranian specialists at BSTU, and following our own assessment, the

United States also announced on April 24, 2000, plans to impose

trade and administrative penalties on the Rector for his involvement with the Iranian missile program. However, the United

States has not moved forward with these penalties as the Russian

Government has since taken its own actions against the Rector.

Specifically, the Russian Ministry of Education initiated an investigation of the Rector. We understand that this investigation resulted in administrative action against the Rector and cancellation

of specialized courses for Iranian students at BSTU. (BSTU itself

remains under U.S. administrative penalties.)
13

However, despite the Russian Government’s nonproliferation and

export control efforts, some Russian entities continued to cooperate

with Iran’s ballistic missile program and engaged in nuclear cooperation with Iran beyond the Bushehr Unit 1 nuclear power reactor project, which could further Iran’s nuclear weapon aspirations.

The United States has made clear to Russia our strong objection

to these activities. My Administration is currently engaged in a review of U.S. nonproliferation policy toward Russia.

On November 17, 2000, the United States Government imposed

missile sanctions on two Iranian entities, the Shahid Hemmat Industrial Group (SHIG) and the Sanam Industrial Group, for knowingly engaging in missile-related transfers. In addition, on November 21, 2000, the U.S. imposed missile sanctions on the Iranian Defense Industries Organization (DIO) and the Ministry of Defense

and Armed Forces Logistics (MODAFEL) for knowingly engaging in

missile proliferation activities with Chinese entities.

VALUE OF NONPROLIFERATION EXPORT CONTROLS

United States national export controls, both those implemented

pursuant to multilateral nonproliferation regimes and those implemented unilaterally, play an important part in impeding the proliferation of WMD and missiles. (As used here, ‘‘export controls’’ refer to requirements for case-by-case review of certain exports, or

limitations on exports of particular items of proliferation concern to

certain destinations, rather than broad embargoes or economic

sanctions that also affect trade.) As noted in this report, however,

export controls are only one of a number of tools the United States

uses to achieve its nonproliferation objectives. Global nonproliferation treaties and norms, multilateral nonproliferation regimes,

interdictions of shipments of proliferation concern, sanctions, export control assistance, redirection and elimination efforts, and robust U.S. military, intelligence, and diplomatic capabilities all work

in conjunction with export controls as part of our overall nonproliferation strategy.

Export controls are a critical part of nonproliferation because

every emerging WMD/missile program seeks equipment and technology from other countries. Proliferators look to other sources because needed items are unavailable within their country, because

indigenously produced items are of substandard quality or insufficient quantity, and/or because imported items can be obtained more

quickly and cheaply than domestically produced ones. It is important to note that proliferators seek for their WMD and missile programs both items on multilateral lists (like gyroscopes controlled

on the MTCR Annex and nerve gas precursors on the Australia

Group list) and unlisted items (like lower-level machine tools and

very basic chemicals). In addition, many of the items of interest to

proliferators are inherently dual-use. For example, key precursors

and technologies used in the production of fertilizers or pesticides

also can be used to make chemical weapons; bio-production technology can be used to produce biological weapons.

The most obvious value of export controls is in impeding or denying proliferators access to key pieces of equipment or technology for

use in their WMD/missile programs. In large part, U.S. national

export controls, and similar controls of our partners in the Aus-
14

tralia Group, Missile Technology Control Regime, and Nuclear Suppliers Group, have denied proliferators access to the largest sources

of the best equipment and technology. Proliferators have mostly

been forced to seek less capable items from non-regime suppliers.

Moreover, in many instances, U.S. and regime controls and associated efforts have forced proliferators to engage in complex clandestine procurements even from non-member suppliers, taking time

and money away from WMD/missile programs.

United States national export controls and those of our regime

partners also have played an important role in increasing over time

the critical mass of countries applying nonproliferation export controls. For example: the seven-member MTCR of 1987 has grown to

33 member countries; the NSG adopted full-scope safeguards as a

condition of supply and extended new controls to nuclear-related

dual-use items; several non-member countries have committed unilaterally to apply export controls consistent with one or more of the

regimes; and most of the members of the nonproliferation regimes

have applied national ‘‘catch-all’’ controls similar to those under the

U.S. Enhanced Proliferation Control Initiative. (Export controls

normally are tied to a specific list of items, such as the MTCR

Annex. ‘‘Catch-all’’ controls provide a legal basis to control exports

of items not on a list, when those items are destined for WMD/missile programs.)

The United States maintains a global program, funded by the

Nonproliferation, Antiterrorism, Demining and Related Activities

(NADR) account and Freedom Support Act (FSA) funds for the New

Independent States, to assist other countries’ efforts to strengthen

their export control systems. Assistance world-wide is focused on

helping weapons-source countries and countries along potential

smuggling routes to develop effective export control regimes, including effective capabilities to control illicit weapons trafficking

across their borders; to establish the necessary legal and regulatory

basis for effective export controls; to improve licensing procedures

and practices; to coordinate, train, and equip export enforcement

agencies, including customs agents and border security and enforcement authorities; to develop and install automated information systems to licensing and enforcement; and to foster effective

interaction between government and industry on export controls.

The program has placed over 20 advisors in countries around the

world to coordinate export control/border security activities.

United States export controls, especially ‘‘catch-all’’ controls, also

make important political and moral contributions to the nonproliferation effort. They uphold the broad legal obligations the

United States has undertaken in the Nuclear Non-proliferation

Treaty (Article I), Biological Weapons Convention (Article III), and

Chemical Weapons Convention (Article I) not to assist anyone in

proscribed WMD activities. They endeavor to assure there are no

U.S. ‘‘fingerprints’’ on WMD and missiles that threaten U.S. citizens and territory and our forces, friends, and interests overseas.

They place the United States squarely and unambiguously against

WMD/missile proliferation, even against the prospect of inadvertent proliferation from the United States itself.

Finally, export controls play an important role in enabling and

enhancing legitimate trade. They provide a means to permit dual-
15

use exports to proceed under circumstances where, without export

control scrutiny, the only prudent course would be to prohibit

them. They help build confidence between countries applying similar controls that, in turn, results in increased trade. Each of the

WMD nonproliferation regimes, for example, has a ‘‘no undercut’’ policy committing each member not to make an export that another

has denied for nonproliferation reasons and notified to the rest, unless it first consults with the original denying country. Not only

does this policy make it more difficult for proliferators to get items

from regime members, it establishes a ‘‘level playing field’’ for exporters.

THREAT REDUCTION

The potential for proliferation of WMD and delivery system expertise has increased in part due to continued economic and political instability in Russia and other Newly Independent States. The

human dimension proliferation continues to present a serious

threat and is addressed through programs that support the transition of former Soviet weapons scientists to civilian research and

technology development activities. These programs currently are

under review by my Administration.

EXPENSES

Pursuant to Section 401(c) of the National Emergencies Act (50

U.S.C. 1641 (c)), I report that there were no specific expenses directly attributable to the exercise of authorities conferred by the

declaration of the national emergency in Executive Order 12938, as

amended, during the period from November 12, 2000 through May

15, 2001.

Æ