Report to Congressional Committees

United States General Accounting Office

GAO

October 2002 NONPROLIFERATION

Strategy Needed to

Strengthen

Multilateral Export

Control Regimes

GAO-03-43
GAO found weaknesses that impede the ability of the multilateral export

control regimes to achieve their nonproliferation goals. A key function of

each regime is to share information related to proliferation. Yet the regimes

often lack even basic information that would allow them to assess whether

their actions are having their intended results. The regimes cannot

effectively limit or monitor efforts by countries of concern to acquire

sensitive technology without more complete and timely reporting of

licensing information and without information on when and how members

adopt and implement agreed-upon export controls. For example, GAO

confirmed that at least one member, the United States, has not reported its

denial of 27 export licenses for items controlled by the Australia Group.

Several obstacles limit the options available to the United States in

strengthening the effectiveness of multilateral export control regimes. The

requirement to achieve consensus in each regime allows even one member

to block action in adopting needed reforms. Because the regimes are

voluntary in nature, they cannot enforce members’ compliance with regime

commitments. For example, Russia exported nuclear fuel to India in a clear

violation of its commitments, threatening the viability of one regime.

The regimes have adapted to changing threats in the past. Their

continued ability to do so will determine whether they remain viable in

curbing proliferation in the future.

Multilateral export control regimes seek to prevent the proliferation of

nuclear, chemical, biological, and conventional weapons.

Sources: Defense Image Digest and GAO.

NONPROLIFERATION

Strategy Needed to Strengthen Multilateral

Export Control Regimes

www.gao.gov/cgi-bin/getrpt?GAO-03-43.

To view the full report, including the scope

and methodology, click on the link above.

For more information, contact Joseph

Christoff (202 512-8979) or

christoffj@gao.gov.

Highlights of GAO-03-43, a report to

Congressional Committees

October 2002

Multilateral export control regimes

are consensus-based, voluntary

arrangements of supplier countries

that produce technologies useful in

developing weapons of mass

destruction or conventional

weapons. The regimes aim to

restrict trade in these technologies

to keep them from proliferating

states or terrorists. The United

States seeks to improve the

effectiveness of these regimes.

GAO was asked to (1) assess

weaknesses of the four regimes

and (2) identify obstacles faced in

trying to strengthen them.

The Secretary of State should

establish a strategy to strengthen

these regimes. This strategy should

include ways for regime members

to

• improve information sharing,

• implement regime changes to

export controls more

consistently, and

• identify organizational changes

that could help reform regime

activities.

Commerce and State concurred

with these recommendations,

which will be considered in a new

review of the regimes ordered by

the President. Defense and Energy

did not comment.
Page i GAO-03-43 Nonproliferation

Letter 1

Results in Brief 2

Background 4

Multilateral Export Control Regimes Have Helped Set Standards

and Stem Proliferation 7

Weaknesses Could Limit Regimes’ Effectiveness 9

Obstacles to Strengthening Export Control Regimes 22

Conclusion 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 29

Appendix I Scope and Methodology 31

Appendix II List of Members of Multilateral Export Control

Regimes 34

Appendix III Reporting Practices of Multilateral Export Control

Regimes 36

Appendix IV Comparison of Control Lists of Multilateral

Export Control Regimes 37

Appendix V Some Factors Considered in Accepting New

Members to Regimes 40

Appendix VI Comments from the Department of Commerce 41

Appendix VII Comments from the Department of Energy 42

Contents
Page ii GAO-03-43 Nonproliferation

Appendix VIII Comments from the Department of State 43

GAO Comments 47

Appendix IX GAO Contact and Staff Acknowledgments 49

GAO Contact 49

Acknowledgments 49

Tables

Table 1: Purposes of the Multilateral Export Control Regimes 5

Table 2: Denial Reporting Distribution Times and Procedures for

Each Regime 17

Table 3: Regime Control Lists and Items: Australia Group 37

Table 4: Regime Control Lists and Items: MTCR 38

Table 5: Regime Control Lists and Items: Nuclear Suppliers Group 38

Table 6: Regime Control Lists and Items: Wassenaar Arrangement 39

Figures

Figure 1: U.S. Export Denials Reported to Regimes Since 1996 11

Figure 2: Denial Notifications for All Regimes, by Country (Total

Denials: 951) 13

Abbreviations

MTCR Missile Technology Control Regime

WMD weapons of mass destruction
Page 1 GAO-03-43 Nonproliferation

October 25, 2002

The Honorable Jesse Helms

Ranking Minority Member

Committee on Foreign Relations

United States Senate

The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

The advent of global terrorism has heightened concerns about the longstanding threat of proliferation of weapons of mass destruction. The

Under Secretary of State for Arms Control and International Security

stated recently that preventing the next wave of terrorist acts requires,

above all, effective use, improvement, and enforcement of the multilateral

tools at U.S. disposal, including export control regimes. Multilateral export

control regimes1

 are voluntary, nonbinding arrangements among likeminded supplier countries that aim to restrict trade in sensitive

technologies to peaceful purposes. Regime members agree to restrict such

trade through their national laws and regulations, which set up systems to

license the exports of sensitive items.

The four principal regimes are the Australia Group, which focuses on

trade in chemical and biological items; the Missile Technology Control

Regime (MTCR); the Nuclear Suppliers Group; and the Wassenaar

Arrangement, which focuses on trade in conventional weapons and related

items with both civilian and military (dual-use) applications. The United

States is a member of all four regimes. Regime members conduct a

number of activities in support of the regimes, including (1) sharing

information about each others’ export licensing decisions, including

certain export denials and, in some cases, approvals; (2) adopting common

export control practices and control lists of sensitive equipment and

technology into national laws or regulations.

 1

Multilateral export control regimes are referred to as either “regimes” or “arrangements,”

and the countries invited to participate in them are variously referred to as “members,”

“participants,” or “participating states.” In this report, we use the term “regimes” and refer

to participating countries as “members.”

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-03-43 Nonproliferation

Because of your interest in efforts to strengthen the multilateral export

control regimes, this report (1) describes their accomplishments, (2)

assesses their weaknesses, and (3) identifies obstacles that the United

States faces in trying to strengthen them. To address these issues, we

reviewed analyses prepared by the Departments of State, Commerce,

Defense, and the intelligence community, and studies prepared by

nonproliferation specialists in academia. We also reviewed regime

documentation, including export denial and approval information, and met

with regime representatives in Paris, France (MTCR); Vienna, Austria (the

Nuclear Suppliers Group and the Wassenaar Arrangement); and Canberra,

Australia (the Australia Group). We also interviewed officials of the

governments of Australia, Austria, Canada, France, Japan, the

Netherlands, New Zealand, and the United Kingdom, and received written

responses to questions we provided to the governments of Canada, Japan,

Germany, Russia, and Hong Kong.

Nonproliferation experts credit the Australia Group, the MTCR, the

Nuclear Suppliers Group, and the Wassenaar Arrangement with several

accomplishments. The regimes have helped set international standards for

limiting exports of sensitive items and helped stem proliferation in

particular countries of concern. For example, the Nuclear Suppliers Group

established new controls for items with both nuclear and nonnuclear uses

in the aftermath of the Persian Gulf War and revelations of Iraq’s nuclear

weapons development program. The Australia Group has helped raise the

costs of attaining a chemical weapons capability by cutting off sources of

supply and forcing proliferators to use less efficient means to produce

chemical weapons. The MTCR helped stop or delay development of

missile programs in Argentina, Brazil, and Egypt. However, because

national governments use a variety of other policy tools to combat

proliferation, it is not possible to attribute these accomplishments

exclusively to the regimes.

We identified several weaknesses in regime activities that could hinder

their goal of curbing proliferation of sensitive items and technologies.

First, not all regime members share complete and timely information on

their export licensing decisions, including denials and approvals of

exports. For example, the United States did not report any of 27 export

denials to the Australia Group between 1996 and 2001, as expected under

regime procedures. Also, about half of the members of the Wassenaar

Arrangement—the only regime with reporting time frames—did not

submit their export denials on time. Second, several factors complicate the

regime goal of applying export controls consistently. It takes some

Results in Brief
Page 3 GAO-03-43 Nonproliferation

members as much as 1 year to adopt agreed-upon changes to control lists

into their national laws or regulations. This lapse of time might allow

proliferators seeking sensitive items to exploit disparities in regime

members’ control lists. In addition, we found significant differences in

how regime members implement agreed-upon controls, such as those for

high performance computers. Finally, export controls cannot be applied

consistently until countries joining regimes have effective export control

systems in place. According to the U.S. government, at least three

countries—Argentina, Belarus, and Russia—did not have effective control

systems in place when they became members of certain regimes.

The U.S. government faces a number of interrelated obstacles in trying to

strengthen the effectiveness of multilateral export control regimes. First,

the difficult process of making consensus-based decisions limits options

for reforming the regimes. Under the current process, a single member can

block regime decisionmaking. Second, the voluntary and nonbinding

character of the regimes means they have no explicit tools to enforce

members’ compliance with their nonproliferation commitments. For

example, the Nuclear Suppliers Group had no direct means to impede

Russia’s export of nuclear fuel to India, an act that the U.S. government

said violated Russia’s commitment to that regime. Third, the rapid pace of

technological change in a globalized economy makes it difficult to keep

control lists current because these lists need to be updated more

frequently. Fourth, “secondary proliferation,” the growing capability of

nonmember countries to develop technologies used for weapons of mass

destruction and trade them with other countries of concern, undermines

the regimes’ ability to prevent proliferation. For example, North Korea has

exported significant ballistic missile-related equipment, components,

materials, and technical expertise to countries of concern, including Iran.

Finally, the U.S. government has no specified or agreed-upon criteria for

assessing the regimes’ effectiveness, despite the stated goal of

strengthening their effectiveness.

We are recommending that the Secretary of State, as the lead U.S. policy

representative to the multilateral export control regimes, take steps to

establish a strategy to strengthen these regimes. As part of this effort, the

Secretary should work with other regime members to increase information

sharing, improve the consistent adoption and implementation of export

controls, and assess ways to overcome organizational obstacles to

reaching decisions and enforcing members’ compliance with their regime

commitments. We are also recommending that the Secretary (1) report

U.S. denials of all export licenses for items controlled by a multilateral
Page 4 GAO-03-43 Nonproliferation

export control regime and (2) establish criteria for assessing the

effectiveness of the regimes.

In commenting on our draft report, the Department of Commerce agreed

with our findings, conclusions, and recommendations. In its written

comments, the Department of Energy indicated that it had no comments

on the report. The Department of Defense declined to provide written

comments. The Department of State said that it will give due regard to our

recommendation to establish a strategy for enhancing the effectiveness of

the multilateral export control regimes as part of a recently announced

review of the regimes ordered by the President. However, State asserted

that our report overall did not reveal any shortcomings of nonproliferation

significance. In fact, our report highlighted the inability of the regimes to

enforce Russia’s compliance with its regime commitments, a matter of

major nonproliferation significance. We also identified several key

weaknesses in regime processes that undermine regime effectiveness.

Multilateral export control regimes are a key policy instrument in the

overall U.S. strategy to combat the proliferation of weapons of mass

destruction and conventional weapons. Current U.S. policy calls for

enhanced multilateral cooperation of all key policy instruments—

international treaties, multilateral export control regimes, export controls,

and security assistance to other countries—in the war against terrorism

and the proliferation of weapons of mass destruction.2

The multilateral export control regimes are voluntary, nonbinding

arrangements among like-minded supplier countries that aim to prevent

the spread of WMD and missile technology and equipment by restricting

trade in sensitive technologies to peaceful purposes. While countries make

no legally binding commitments in joining them, participating countries

undertake a political commitment to abide by the goals and principles of

the regime. The regimes operate on the basis of consensus of all members

and decisions on how to implement and interpret regime decisions are left

to the national discretion of each member. The Australia Group, the

 2

This position was advanced by the Under Secretary for Export Administration,

Department of Commerce, Bureau of Industry and Security (September 18, 2001, and

February 26, 2002) and by the Under Secretary of State for International Security and Arms

Control (May 6, 2002). See U.S. General Accounting Office Weapons of Mass Destruction:

Assessing U.S. Policy Tools for Combating Proliferation, GAO-02-226T (Washington, D.C.:

Nov. 7, 2001) for a description of these other policy tools.

Background
Page 5 GAO-03-43 Nonproliferation

MTCR, and the Nuclear Suppliers Group focus on trade related to WMD

and their delivery systems and are referred to as WMD regimes; the

Wassenaar Arrangement focuses on trade in conventional weapons and

related dual-use items.

Specifically, the Nuclear Suppliers Group and the Australia Group seek to

ensure that trade in controlled items does not contribute to nuclear or to

chemical or biological weapons proliferation (see table 1). The MTCR

seeks to limit the spread of missile-related equipment and technology. The

Wassenaar Arrangement aims to contribute to international security and

stability by promoting greater responsibility and transparency in arms and

sensitive dual-use goods and technology transfers. None of the regimes

identify specific countries as targets. Collectively, however, the regimes

strive to stop, slow, or increase the cost and risk of detection efforts by

countries’ of concern to acquire sensitive technologies and capabilities.

Table 1: Purposes of the Multilateral Export Control Regimes

Regime

Year

established Purpose Precipitating event

Number of

members

Nuclear Suppliers

Group

1975 To ensure that nuclear trade for peaceful

purposes does not contribute to the

proliferation of nuclear weapons or explosive

devices while not hindering such trade.

India’s 1974 nuclear

explosion

40

Australia Group 1985 To ensure that the industries of the

participating countries do not assist, either

purposefully or inadvertently, states seeking to

acquire a chemical and biological weapons

capability.

Iraqi use of chemical

weapons against Iran

33

MTCR 1987 To limit the risks of proliferation of weapons of

mass destruction (i.e., nuclear, chemical, and

biological weapons), by controlling transfers

that could make a contribution to delivery

systems (other than manned aircraft) for such

weapons.

Missile developments in

the late 1970s and early

1980s

33

Wassenaar

Arrangement

1996 To contribute to regional and international

security and stability, by promoting

transparency and greater responsibility in

transfers of conventional arms and dual-use

goods and technologies, thus preventing

destabilizing accumulations.

Dissolution of the

Coordinating Committee

for Multilateral Strategic

Export Controls

33

Sources: Australia Group, Nuclear Suppliers Group, MTCR, and Wassenaar Arrangement.

As highlighted in table 1, three of the regimes were created in response to

major proliferation events. The Nuclear Suppliers Group was established

in 1975 after India—a nonnuclear weapons state—tested a nuclear

explosive device in 1974 and was strengthened after the1991 Gulf War and
Page 6 GAO-03-43 Nonproliferation

revelations of Iraq’s efforts to develop weapons of mass destruction. The

Australia Group was established in 1985 as a response to the use of

chemical weapons in the Iran-Iraq War, and the MTCR was established in

1987 in response to missile developments in the 1970s and 1980s. The

Wassenaar Arrangement, in contrast, was created in 1996 after the

dissolution of its Cold War predecessor3

 to include conventional

technologies not covered by the other regimes.

The regimes also share overlapping memberships of between 33 to 40

states that are generally suppliers of sensitive technologies. All regimes

except the Wassenaar Arrangement have added new members in recent

years. Specifically, 28 states are members of all 4 regimes. Although China

is a major supplier, it is not a member of any of these regimes but has

declared its commitment to abide by the original 1987 guidelines and

parameters of the MTCR. In addition, China has joined a multilateral

nuclear export control group called the Zangger Committee.4

 See appendix

II for a list of the members of each regime.

All the regimes have discussed ways to address terrorism since September

11, 2001, and are still considering what more to do. For example, the

Australia Group added counterrorism as an official purpose of the regime

and added a number of items to its control list in an effort to control the

types of items that terrorists, rather than states, would seek to develop

chemical or biological weapons. These items included toxins, biological

equipment, and the transfer of knowledge. The Wassenaar Arrangement

amended its guidelines to add language exhorting its members to continue

to prevent the acquisition of conventional arms and technologies by

terrorists. The Nuclear Suppliers Group is considering proposals to

provide more guidance to governments for reviewing export licenses for

terrorism-related concerns. MTCR members in September 2002 announced

 3

The Coordinating Committee for Multilateral Strategic Export Controls was created in

1949 to control the transfer of militarily useful technology to the Warsaw Pact countries.

The end of the Cold War in 1989 and the collapse of the Soviet Union in 1992 ended the

rationale for the Coordinating Committee control regime. In 1993, the Coordinating

Committee members agreed to abolish the organization and establish a new multilateral

regime. In 1996, representatives of the 33 founding member nations agreed to the Initial

Elements of the Wassenaar Arrangement on Export Controls for Conventional Arms and

Dual-Use Goods and Technologies.

4

The Zangger Committee, established in 1971 to consider the provisions of article III.2 of

the Nuclear Nonproliferation Treaty, maintains a list of nuclear items that is similar to the

Nuclear Suppliers Group’s part 1 guidelines. We did not review the activities of the Zangger

Committee, except as they relate to the Nuclear Suppliers Group.
Page 7 GAO-03-43 Nonproliferation

that they will further study how possible changes to the MTCR guidelines

and control list may contribute to limiting the risk of controlled items and

their technology falling into the hands of terrorists.

Nonproliferation experts credit the Australia Group, the MTCR, the

Nuclear Suppliers Group, and the Wassenaar Arrangement with several

accomplishments. These include helping set international standards for

limiting exports of sensitive items and helping stem proliferation in

particular countries of concern. Because the multilateral export control

regimes are only one of several policy tools that national governments use

to combat the proliferation of weapons of mass destruction and advanced

conventional weapons, it is difficult to attribute accomplishments

exclusively to the regimes.

Each regime has helped set international standards for how countries

should control exports of sensitive technology.

• In 1978, the Nuclear Suppliers Group published the first guidelines

governing exports of nuclear materials and equipment. These guidelines

established several requirements for the members to apply, including the

application of International Atomic Energy Agency safeguards at facilities

using controlled nuclear-related items. Subsequently, in 1992, the Nuclear

Suppliers Group broadened its guidelines by requiring that members insist

on full-scope safeguards as a condition of supply for their nuclear exports.

Full-scope safeguards require a country to have an agreement with the

International Atomic Energy Agency to apply inspection and monitoring

procedures for all nuclear facilities in a country, not only those receiving a

particular nuclear item from a supplier. The Nuclear Suppliers Group, in

the aftermath of the Persian Gulf War and revelations of Iraq’s nuclear

weapons development program, also created a dual-use control regime,

which established new controls for items with nuclear and nonnuclear

uses that do not trigger a requirement for international safeguards when

exported.5

 5

Previously, the Nuclear Suppliers Group control list included nuclear equipment and

material, the export of which would trigger a requirement that International Atomic Energy

Agency safeguards apply to the recipient facility.

Multilateral Export

Control Regimes Have

Helped Set Standards

and Stem

Proliferation

Setting International

Standards for Exports of

Sensitive Items
Page 8 GAO-03-43 Nonproliferation

• In 1985, the Australia Group convened its first meeting to begin

coordinating national policies aimed at restricting the proliferation of

chemical weapons and related dual-use items. In addition, in June 2002,

the Australia Group adopted a provision in its new guidelines for licensing

sensitive chemical and biological items that made it the only regime to

require its members to adopt “catch-all” controls. “Catch-all” controls

authorize a government to require an export license for items that are not

on control lists but that could contribute to a WMD proliferation program

if exported. Furthermore, the Australia Group added controls on

technology associated with dual-use biological equipment, as well as

controls on the intangible transfer of information and knowledge that

could be used for chemical and biological weapons purposes.

• In 1987, the MTCR established guidelines and a control list of items as the

first international standard for responsible missile-related exports,

according to Department of State officials. In addition, from 1999 to 2001,

MTCR developed an International Code of Conduct intended to create a

voluntary political commitment, open to all countries, against ballistic

missile proliferation. The code—scheduled to be launched by the

Netherlands on behalf of the European Union—is to consist of a set of

broad principles, general commitments, and modest confidence-building

measures and is intended to supplement the MTCR.

• In 1996, the Wassenaar Arrangement was successfully established to

succeed the Coordinating Committee for Multilateral Strategic Export

Controls despite the opposition of some countries, according to

nonproliferation specialists. One notable accomplishment of the

Wassenaar Arrangement is the successful development of an agreement

among its members for guidelines on shoulder-fired missiles, such as the

Stinger, according to State Department officials. Although the former head

of the Wassenaar Secretariat stated that the achievements of the

Wassenaar Arrangement are limited and that “there have been no

spectacular results,” he stated that the situation would be worse without

the Arrangement.

The export control regimes have helped stop, slow, or raise costs to

countries of concern of WMD, according to nonproliferation experts. For

example, the MTCR helped reduce the number of countries with ballistic

missile programs, according to Department of State officials. Specifically,

the MTCR contributed to ending sensitive ballistic missile programs in a

number of countries, including Argentina, Brazil, Egypt, South Africa, and

Taiwan. The MTCR also may have helped slow missile development in

India, Iran, Israel, North Korea, and Pakistan, whose missile programs

Stemming Proliferation in

Countries of Concern
Page 9 GAO-03-43 Nonproliferation

might have been further along or more advanced in the absence of the

regimes, according to nonproliferation experts. Similarly, the Nuclear

Suppliers Group helped convince Argentina and Brazil to accept full-scope

safeguards on their nuclear programs and end nuclear activities without

safeguards in exchange for expanded access to international cooperation

for peaceful nuclear purposes.6

Regimes generally have helped raise the costs to proliferators of acquiring

sensitive technologies, according to nonproliferation experts. They have

induced most major suppliers to responsibly control their exports and

have significantly reduced the availability of technology and equipment

available to programs of concern, according to a Department of State

official. Moreover, regime members have made it more difficult, more

costly, and more time consuming for proliferators to obtain the expertise

and material needed to advance their programs. The regimes’ efforts have

caused delays, forced proliferators to use elaborate procurement

networks, and forced them to rely on older, less effective technology,

according to the official. For example, the Australia Group may have

raised the cost of attaining an offensive chemical weapons capability by

eliminating some sources of supply, according to nonproliferation experts

and regime public statements. They noted that, as a result, some countries

of concern have stopped pursuing the acquisition of chemical weapons.

We identified several significant weaknesses in the activities of the

regimes that could limit their ability to curb proliferation. Specifically, we

found that regime members do not (1) share complete and timely export

licensing information or (2) harmonize their export controls promptly to

accord with regime decisions.

We found deficiencies in the sharing of export licensing information

between regime members.7

 These deficiencies could hamper the ability of

regime members to factor key information about potential proliferators

into their export licensing decisions. For example, we found that regime

 6

Full-scope safeguards are International Atomic Energy Agency safeguards on all facilities

in a country that receive controlled nuclear material and equipment.

7

We recognize that regimes also share information on trends in proliferation, trends in

proliferator procurement, the use of front companies and brokers, and end users of

concern. Such exchanges sensitize regime members to proliferation issues of concern and

provide the “big picture” about weapons procurement, according to the Department of

State.

Weaknesses Could

Limit Regimes’

Effectiveness

Members Do Not Report

Complete and Timely

Information to Regimes
Page 10 GAO-03-43 Nonproliferation

members may not always share complete information in reporting export

denials to the regimes. In addition, reporting information on export denials

for Wassenaar Regime members is generally slow. Other regimes have not

set deadlines for their members to report such information and cannot

determine how long it takes members to report. Furthermore, three

regimes do not collect export information that would enable members to

consult with each other before approving licenses for exports that other

members have denied. Members lack such information because most

regimes do not expect members to report approvals of export licenses.

Finally, only two regimes use electronic data sharing systems to post and

retrieve data. As a result, we found significant delays in regime members’

ability to access information quickly for those regimes lacking this

capability.

All four regimes expect members to report denials of export licenses for

controlled dual-use items. By sharing information about the licenses it has

denied, a regime member helps other members avoid inadvertently

undercutting its export licensing decisions and provides regime members

with more complete information for reviewing questionable export license

applications.8

 Appendix III describes the export denial reporting

procedures for each regime.

Despite the expectation to report export denials, the United States did not

notify the Australia Group between 1996 and 2002 that the U.S.

government denied 27 licenses to export Australia Group-controlled items

to such countries as China, India, and Syria. Fifteen of these licenses

involved chemicals that could be used for precursors for toxic chemical

agents and the remaining licenses involved other chemical or biological

equipment and technology. In contrast, the United States reported multiple

denials to each of the other regimes in the same period (see fig. 1). The

Department of State said that the United States was not required to report

these denials to the Australia Group because the U.S. government denied

them for reasons other than chemical and biological weapons

 8

As part of their “no undercut” policy, three regimes specifically oblige their members to

consult with members who have denied a license before approving a similar export. The

Wassenaar Arrangement does not include this type of “no-undercut” policy. Thus, members

have no obligation to consult before exporting items denied by other members, but are

expected to inform members after they undercut another’s denial.

Members May Not Always

Share Complete Information
Page 11 GAO-03-43 Nonproliferation

nonproliferation purposes.9 However, officials of the Australia Group

Secretariat disagreed with this assertion. They stated that Australia Group

members should notify the Australia Group Chair whenever they deny

licenses to export Australia Group-controlled items, including those

controlled under another regime. Reporting such denials, they stated,

would help the Australia Group maintain its effectiveness, ensure that

other members’ denials are not undercut, monitor and analyze export

trends, and promote compliance with regime commitments. Furthermore,

in its technical comments on this report, the Department of State agreed

that sharing information about export licenses is a valuable element of

information-sharing efforts, but State could not explain why it did not

share these 27 denials under the regime’s broader information exchange

activities.

Figure 1: U.S. Export Denials Reported to Regimes Since 1996

Source: GAO analysis of Department of State data.

 9

State Department officials indicated that 5 of the 27 export denials concerned the same

end users in previous notifications to the Australia Group. The officials provided written

documentation for an additional 13 denials showing that they were reviewed for chemical

and biological weapons proliferation concerns. However, they could not explain why these

denials were not reported to the regime.
Page 12 GAO-03-43 Nonproliferation

We found that member states may not be providing complete information

regarding their export denials. We were unable to definitively establish the

reasons why other nations have not reported denials because we do not

have access to their export licensing data. However, our analysis of the

denial reporting data available to us also reveals that a significant

percentage of each regime’s membership has never reported any denials.

We found that the percentage of members in each regime that have never

reported export denials ranged from 45 percent in one regime to 65

percent in another.

U.S. and foreign officials could not explain why some regime members

have never reported any denials. Although a 2000 analysis of one regime’s

denial reporting recommended an evaluation to determine why members

were submitting few denial notifications, we saw no evidence that the

regime had conducted such an analysis. They speculated that some

members do not do so because they (1) do not receive many export

license applications for controlled items or (2) have not denied any

applications. Also, several countries, including Australia, France, and

Japan, informally discourage exporters from applying for licenses that

those governments believe they likely would deny, according to U.S.,

foreign government, and regime officials. Because such “informal denials”

are not reported to the regimes, they do not alert other regime members

that a potential country of concern may be seeking an item.

When denial notifications are aggregated for all regimes, three countries

accounted for 66 percent of all denial notifications. The United States,

relative to other regime members, has reported a large percentage of

export denials to each of the regimes. Figure 2 shows the percentage of

denial notifications by country aggregated for all the regimes.10

 10Data cover different time periods because regimes began reporting denial notifications at

different times. Members also report denials under “catch-all” authority—which allows

governments to require licenses for items not on control lists that might contribute to WMD

proliferation if exported—but this activity is only voluntary.
Page 13 GAO-03-43 Nonproliferation

Figure 2: Denial Notifications for All Regimes, by Country (Total Denials: 951)a

a

References to particular country names, other than the United States, are omitted for reasons of

classification.

Source: GAO analysis of Department of State data.

All four regimes generally expect members to report denials of export

licenses for controlled dual-use items in a timely fashion.11 Prompt export

denial reporting can help ensure that a country of concern cannot “shop

around” after being denied a license by a regime member. According to the

chair of one regime, even a month’s delay in sharing such information

would provide a country of concern with more than enough time to shop

around for another source of a sensitive item.

The Wassenaar Arrangement is the only regime to have set deadlines for

its members’ denial reporting (see app. III), but reporting by members is

slow. Members are expected to report denials of the more sensitive dual-

 11For example, the Nuclear Suppliers Group expects members to report denials of items on

its Dual-Use Control List. Nuclear Suppliers Group guidance states governments should

provide “prompt” notification to other governments of decisions not to authorize a transfer

of equipment, material, or related technology identified in the guidance.

Denial Reporting Is Slow for

Many Wassenaar Members, but

Timeliness Cannot Be Assessed

for Other Regimes
Page 14 GAO-03-43 Nonproliferation

use items on its control lists no later than 60 days after the date of the

denial; denial notices for less sensitive items—over 75 percent of dual-use

items on Wassenaar control lists—are expected to be reported in an

aggregated format every 6 months. We found that the Wassenaar

Arrangement’s members submit these denial notifications on schedule

only about 36 percent of the time.12 However, the Wassenaaar Arrangement

Secretariat stated that a valid picture of denial or other notifications can

be gained only when all the notifications are entered into the database, an

action that is still in process. The Secretariat noted that any analysis done

on the notifications before this milestone has been achieved would be

flawed and open to later revision once the data is entered into the

database correctly in early 2003.

U.S. government officials said that one reason that U.S. denial reporting to

regimes may not be timely is because the U.S. government does not report

export denials until after an exporter completes or foregoes an appeal of

the denial. In response to our enquiries, the officials from the Department

of Commerce’s Bureau of Industry and Security recommended to the

Department of State in August 2002 that the United States report all

denials to the appropriate regime at the time that the exporter is first

officially notified of the intent to deny the license application. In

comments on a draft of this report, the Department of State said that it

proposed to the Department of Commerce that it either should seek the

exporter’s agreement to forego appeals or that the U.S. government should

circulate a “denial on inquiry” notification to the regime until the export

application is final.

Other regimes have not set deadlines for reporting and, furthermore,

cannot determine the amount of time that elapses between the date a

government makes a denial and reports it to the regime, thus undermining

the value of the reporting system. We could not determine the time it takes

for Australia Group or Nuclear Suppliers Group members to report export

denials because their members do not report dates of export denials

uniformly. For example, a Nuclear Suppliers Group member may report its

denial “notification date” as either (1) the actual date that it denied the

export or (2) the date it transmitted the denial to the regime. Similarly, we

could not determine precise MTCR denial reporting times because the

MTCR export denial data maintained by the Department of State records

 12The reporting data that we reviewed covers a period from 1997 through 2001, before a

new electronic information-sharing system became operational for most members.
Page 15 GAO-03-43 Nonproliferation

only the month of the denial. U.S. and foreign government officials agreed

that denial reporting for the regimes needs to be more timely to improve

regime effectiveness.

Access to information on a member’s decisions to approve exports to

nonmembers would help other regime members identify possible

proliferation patterns and determine whether specific exports had

undercut any of their license denials. However, only one regime, the

Wassenaar Arrangement, expects its members to share information on

approved export licenses. Because the Wassenaar Arrangement aims to

prevent destabilizing accumulations of weapons and sensitive dual-use

technologies in regions around the world, it gathers information about

approved dual-use exports for items on its more sensitive control lists and

about transfers of conventional weapons. However, according to U.S.

officials, the Wassenaar Arrangement gathers this information only once

every 6 months and aggregates it to a degree that it cannot be used

constructively to identify (1) undercuts of license denials, (2) items

approved and transferred, and (3) recipients of the items. Consistent with

this theme, we reported in April 2002 that approval reporting of certain

semiconductor manufacturing equipment lacks enough detail to reveal the

equipment’s capabilities or intended end use and is of little practical use

for determining the semiconductor manufacturing capability of the

country to which the equipment is exported.13

The Australia Group, the MTCR, and the Nuclear Suppliers Group each

have a formal “no undercut” policy. This policy sets an expectation that

whenever a member reports an export denial to a regime, no other

member will export a similar item without first consulting with the

member who denied it. However, these regimes do not share information

on the licenses that they approve, making it difficult to assess whether the

“no undercut” expectation is being met. To address this weakness, the

United States proposed in May 2002 that the Nuclear Suppliers Group

require its members to begin reporting approval information. Department

of State officials said members discussed the feasibility of this proposal in

September 2002, but could not say if or when this proposal would be

implemented because of members’ concerns about reporting proprietary

information. One Department of State official said that the regimes do not

 13U.S. General Accounting Office, Export Controls: Rapid Advances in China’s

Semiconductor Industry Underscore Need for Fundamental U.S. Policy Review,

GAO-02-260 (Washington, D.C.: April 19, 2002).

Not Sharing Information on

Approved Exports Hampers

Regimes
Page 16 GAO-03-43 Nonproliferation

need to share this information to identify undercuts because the members

are “self-policing” and their adherence to the “no undercut” policy is based

on trust.

Two regimes, the Nuclear Suppliers Group and the Wassenaar

Arrangement, have established electronic information systems for nearly

instant, world-wide communications that can help to improve the

timeliness and quality of information sharing, especially export denial

reporting. The Nuclear Suppliers Group Information Sharing System

(NISS) was originally set up around 1993, according to a Los Alamos

National Laboratory official. The Wassenaar Arrangement Information

System (WAIS), operational for most members since January 2002, allows

participating countries to post export denial notices almost as soon as the

participating government issues the denial.14 The Australia Group has

investigated setting up its own system and, in 2001, inquired about the

NISS. However, it has not made a commitment to move to an electronic

information and document management system. Department of Commerce

officials stated that the U.S. government has some concerns about the

security of information on an electronic system for this regime and the

MTCR since much of the data to be shared would be classified.

As shown in table 2, the average time for regimes to distribute export

denials, once received from their members, ranges from as little as 2 days

for the Nuclear Suppliers Group to as much as 30 days for the MTCR. The

members of both the Nuclear Suppliers Group and Wassenaar

Arrangement have the capability to post their denial notices as soon as

member governments officially issue the denials.

 14We did not independently assess the operations and effectiveness of either the NISS or

WAIS systems. Department of State officials told us that the WAIS is experiencing certain

limitations, but that these will be addressed in subsequent modifications to the system.

Only Two Regimes Use

Electronic Data Systems to

Send and Retrieve Information

on Denied Exports
Page 17 GAO-03-43 Nonproliferation

Table 2: Denial Reporting Distribution Times and Procedures for Each Regime

Regime

Frequency regimes report denied

exports to members

Media for regimes to report

denied exports

Australia Group Weekly Paper (physically delivered)

MTCR Monthly Paper (physically delivered)

Nuclear Suppliers

Group

2 days (average) Electronic E-mail system

Wassenaar

Arrangement

Not availablea Electronic E-mail system

a

Frequency could not be determined because of data limitations noted by the Wassenaaar

Arrangement Secretariat.

Source: GAO analysis of Department of State data.

We observed significant differences in timeliness of report distribution to

memberships and data retrieval among the regimes using electronic

information systems and those not using them. State Department officials

retrieved documents and export denial notifications that we requested

from the NISS and the WAIS electronic systems in minutes. In contrast,

State officials provided us with the same type of information for the MTCR

and the Australia Group 6 months after we requested it. State officials said

that this took so long because they had to manually search drawers of

paper files and that new staff could not readily find documents filed by

staff who were on leave. In addition, Department of State and Energy

officials showed us how they could search the NISS in various ways to

identify patterns of proliferators and evidence of countries of concern

shopping for controlled items among several regime members.

The electronic information systems also provide more uniform data.

Before the WAIS, the use of paper systems meant that denial reports

arrived at the Wassenaar Arrangement Secretariat in a variety of formats,

with individual data fields often presented in noncomparable ways among

members, according to government and Secretariat officials. Member

countries are more likely to provide uniform and comparable data that can

be more easily analyzed because the electronic forms have reporting fields

that must be filled in correctly before submission.

Harmonization, a goal shared by each regime, refers to efforts by regime

members to review and agree upon common control lists of sensitive

items and technologies and approaches to control them. (See app. IV for a

description of the control lists developed by each regime and examples of

the items on each list.) However, several factors undermine this goal.

Differences in How

Members Implement

Export Controls Can

Undermine the Regime

Goal of Harmonization
Page 18 GAO-03-43 Nonproliferation

First, regime members may control an item differently because some

members take significantly longer than others to adopt agreed-upon

regime changes into their national laws or regulations. In addition, only

one regime tracks whether its members have adopted regime control list

changes; none of the regimes tracks when these changes are implemented.

Second, in some cases, there are significant differences in how members

implement the same export controls that may reduce the effectiveness of

common nonproliferation efforts. Finally, export controls cannot be

applied consistently until countries joining regimes have effective export

control systems in place. According to the U.S. government, at least three

countries—Argentina, Belarus, and Russia—did not have effective control

systems in place when they became members of certain regimes.

Each regime member is expected to adopt and implement control list

changes consistently, subject to its national discretion. If agreed-upon

changes to control lists are not adopted at the same time, proliferators

could exploit these time lags to obtain sensitive technologies by focusing

on regime members that are slowest to incorporate the changes. Only the

Australia Group attempts to identify if members adopted the most recently

agreed-upon controls in their domestic regulations and laws, although it

does not track the dates that members do so. Based on our analysis, we

found some significant differences among members in the time taken to

adopt agreed-upon control list changes into their national laws or

regulations. In the case of the Wassenaar Arrangement, the European

Union adopted December 2000 plenary changes within 3 months, whereas

the United States did not adopt all these changes into export regulations

until 15 months later (March 2002.)15 In comparison, the European Union16

adopted Nuclear Suppliers Group plenary changes within a year of the

Nuclear Suppliers Group plenary, and Japan adopted regulations for all

regime changes within 6 months. Department of Commerce officials

explained that the U.S. regulatory process is more comprehensive and

thorough than that of some other regime members, thus requiring a longer

time for the United States to adopt regime changes. Other regime members

adopt the texts of regime control changes verbatim, while the United

 15The European Union adopted December 2000 Wassenaar Arrangement changes in March

2001 and the United States adopted these changes in the following phases: (1) revisions on

microprocessors, graphic accelerators, and external interconnects adopted April 9, 2001;

(2) revisions on eight categories of items adopted January 3, 2002; (3) revisions on

computers adopted March 8, 2002.

16As of September 2002, the European Union had 15 member states.

Some Members Take Longer

Than Others to Adopt Agreedupon Changes
Page 19 GAO-03-43 Nonproliferation

States also explains in its regulations the purpose behind the regulatory

change and how it will affect the exporter, according to the officials.

Once regime members have adopted similar changes to export control lists

or practices, these changes can be undermined by variations in how

member states implement them. The Assistant Secretary of Commerce for

Export Administration emphasized the importance of minimizing these

differences when he said in October 2001 that member countries

implement agreed-upon control lists differently with a substantial degree

of national discretion. For example, the United States has said that its

export controls on high-performance computers, which use a measure of

computer performance to indicate when an export license is required, are

consistent with those of Wassenaar Arrangement controls. Both the U.S.

and Wassenaar Arrangement control thresholds are set at 28,000 millions

of theoretical operations per second (MTOPS); computers above this level

would require a license for export.17 However, the United States also

maintains a “license exception” to this threshold. In January 2002, the

President announced that this control threshold would increase from

85,000 MTOPS to 190,000 MTOPS; only computers above this higher

threshold to be exported to countries such as China, India, and Russia

would require a license. As a result of this practice and of U.S. resistance

to members’ efforts to remove or revise the current performance measure

for computers, several Wassenaar members have accused the United

States of unilateral action at odds with regime harmonization goals.

Department of State officials expressed concern that continued U.S.

resistance without adequate justification would cause some countries to

unilaterally remove items from their national control lists.18 According to

the Department of Commerce, the United States and the other Wassenaar

Arrangement members agreed to raise computer control levels from 28,000

to 190,000 MTOPS at a September 2002 Wassenaar meeting, 8 months after

the United States had changed its license exception control level.

Differences in how members implement agreed-upon export controls may

become an issue for the Australia Group as well. The Australia Group’s

June 2002 Plenary agreed to require its members to adopt “catch-all”

 17Computer exports to countries that are state sponsors or terrorism require a license for

computers above 6 MTOPS.

18See U.S. General Accounting Office, Export Controls: More Thorough Analysis Needed to

Justify Changes to High Performance Computer Controls, GAO-02-892 (Washington, D.C.:

August 2, 2002).

Significant Differences Found

in Members’ Implementation of

Controls
Page 20 GAO-03-43 Nonproliferation

controls—controls that authorize a government to require an export

license for items that are not on control lists but that could contribute to a

WMD proliferation program if exported—and to make this requirement an

attachment to its new guidelines. The United States has encouraged

countries to adopt catch-all controls as a way of strengthening

nonproliferation efforts.19 However, while most members of the WMD

regimes have adopted catch-all controls, significant differences over how

members implement them raise questions about their effectiveness in

stopping proliferation. For example, under some countries’ catch-all

controls, the government must show that an exporter had absolute

knowledge that an export would support a WMD proliferation activity to

require a license or to prosecute a violation of law. Under other countries’

catch-all controls, such as those of the United States, the government

needs to show only that an exporter knew or suspected that an export

would support a WMD proliferation activity. A 2001 Department of

Commerce report affirmed that different countries’ standards complicate

law enforcement cooperation, and Commerce noted that even the United

States faces challenges in enforcing catch-all controls on dual-use goods

because it is difficult to detect, investigate, and prosecute cases under the

U.S. catch-all provision standard.20

Regimes consider the implementation of an effective national export

control system a criterion for a country’s membership eligibility but in

three cases have admitted members that did not meet this criterion. (See

app. V for some factors to consider when evaluating a prospective member

to each regime.) Without an effective export control system, members

cannot ensure that they are implementing agreed-upon controls

consistently. While regime bodies, such as the chair or secretariat, do not

evaluate the export control systems of prospective members, individual

members, including the United States, have done so for each prospective

member.

 19In 1998, 21 of 29 respondents to a U.S. survey distributed to the then-35 Nuclear Suppliers

Group members indicated that they had “catch-all” controls in place. The report noted that

at least three of the six members that did not respond also had “catch-all” controls. In 1999,

22 of the 29 respondents to a U.S. survey distributed to the then-32 MTCR members noted

that they had “catch-all” controls in place.

20Foreign Policy Report, 2001 (U.S. Department of Commerce, Washington, D.C.)

Lack of Effective Export

Control Systems Weakens

Harmonization Efforts
Page 21 GAO-03-43 Nonproliferation

Russia, Argentina, and Belarus did not have effective export control

systems in place at the time of their admission to regimes, according to

U.S. government officials and documents.

• Russia does not yet have an effective export control system in place,

according to U.S. government officials, even though it is a member of three

regimes. The Soviet Union, Russia’s predecessor, was a founding member

of the Nuclear Suppliers Group. Russia also joined the Wassenaar

Arrangement when it was established in 1996. In June 2002, the Assistant

Secretary of State for Nonproliferation stated that Russia’s implementation

and enforcement of its export controls remain a cause of concern. An

unclassified January 2002 report by the Director of Central Intelligence

stated that passing export control legislation will have little impact on key

weaknesses of the Russian export control system, such as weak

enforcement and insufficient penalties for violations.21 According to some

U.S. and foreign government officials, it is better to have certain countries

such as Russia in the regimes in order to influence their export controls

and behavior or for other foreign policy reasons.

• Argentina did not have in place an effective export control system when it

joined the Wassenaar Arrangement in 1996. Recognizing that Argentina did

not have export controls over dual-use items and had not adopted the

Wassenaar Arrangement control list as late as 1999, the United States

urged Argentina to pass appropriate legislation. Argentina eventually

passed legislation to adopt dual-use export controls, which went into

effect in June 2000.

• Belarus had export controls in place but was not adequately enforcing

them when it became a member of the Nuclear Suppliers Group in fiscal

year 2000, according to the Department State. However, the Department of

State noted that at the time Belarus joined that regime, State still had

concerns that Belarus was not adequately enforcing certain conventional

arms-related controls. Regime members sometimes accept or reject a

 21Unclassified Report to Congress on the Acquisition of Technology Relating to Weapons

of Mass Destruction and Advanced Conventional Munitions, 1 January through 30 June

2001 (Washington, D.C.). The report noted that, during 1998 to 1999, the Russian

government stated that it had obtained convictions for unauthorized technology transfers

in three cases. The report referred to Russian press accounts of cases in which advanced

equipment was described erroneously in export documentation and exported, and cases in

which enterprises sometimes falsely declared goods to avoid taxes.
Page 22 GAO-03-43 Nonproliferation

particular country’s membership for political reasons, according to U.S.

and foreign government officials.

The U.S. government faces a number of interrelated obstacles in trying to

strengthen the multilateral export control regimes. First, and most

significant, efforts to strengthen the regimes have been hampered by a

requirement to reach consensus among all members about every decision

made and by the inability to enforce compliance with commitments in

arrangements that are voluntary and nonbinding. Second, the rapid pace of

technological change and the growing trade of sensitive items among

WMD proliferators complicates efforts to harmonize export controls and

keep control lists current. Third, the U.S. government has no specified or

agreed-upon criteria for assessing regimes’ effectiveness.

U.S. and foreign government officials and nonproliferation experts all

stressed that the regimes are consensus-based organizations and depend

on the like-mindedness or cohesion of their members to be effective.

However, regimes have found it especially difficult to reach consensus on

such issues as making changes to procedures and control lists and

identifying countries to be targets of the regimes. In addition, many U.S.

and foreign government officials said that members’ compliance with

regime commitments cannot be enforced because the multilateral export

control regimes are voluntary, nonbinding groups.

A single member’s objection can stalemate a regime decision. For

example, Russia has impeded consensus on several issues in the three

regimes to which it belongs—MTCR, Nuclear Suppliers Group, and the

Wassenaar Arrangement—according to several nonproliferation experts.

These issues included broadening information in denial notifications and

obtaining greater transparency into deliveries of small arms and light

weapons. One government stated that it is easier to reach consensus in the

Australia Group because Russia is not a member. On the other hand, State

and Commerce Department officials said that the need for consensusbased decision-making can work to the U.S. advantage because it prevents

a regime from adopting proposals that the United States might oppose.

The regimes also have found it difficult to reach consensus on designating

countries that could be targets of the regimes and, therefore, would not

receive exports listed on the regimes’ control lists. Some members support

the idea of designating target countries and have proposed countries to be

named, while other members disagree. For example, repeated efforts by

Obstacles to

Strengthening Export

Control Regimes

Need for Consensus and

Voluntary Nature of

Regimes Limit Prospects

for Change

Consensus Process Makes

Decision-Making Difficult
Page 23 GAO-03-43 Nonproliferation

Wassenaar Arrangement members to identify specific countries of concern

or even regions of unrest have failed because of a lack of consensus.

Instead, each regime member determines which countries are of concern

to it when implementing its national export controls. Nonetheless,

according to the Department of State, there is broad agreement that states

whose behavior is a cause for serious concern—Iran, Iraq, Libya, and

North Korea—will be dealt with firmly by Wassenaar members.

As an alternative to designating regime targets, the Nuclear Suppliers

Group has established conditions for supply of nuclear and nuclearrelated, dual-use items. For example, members of the regime have agreed

to supply nuclear equipment and material only to countries that have in

place a full scope safeguards agreement with the International Atomic

Energy Agency for all facilities in the country and only upon assurances

that adequate physical protection will be maintained on the supplied

items. Thus, countries that do not meet these conditions in effect become

targets of the regime.

The Under Secretary of State for Arms Control and International Security

stated in May 2002 that U.S. nonproliferation policy goals are to stop the

development of WMD and ensure compliance with existing arms control

and nonproliferation treaties and commitments. Noncompliance can

undermine the efficacy and legitimacy of these regimes, according to the

Under Secretary.

However, the regimes do not have their own means to monitor and

enforce members’ adherence to regime commitments. Instead, they rely on

diplomatic pressure to influence compliance or the occasional intelligence

information from member states to identify activities that might be

inconsistent with regime commitments. According to the Department of

State, in the most clear and serious example of a violation of regime

nonproliferation commitments, Russia shipped nuclear fuel to the Tarapur

power reactors in India in January 2001. As a Nuclear Suppliers Group

member, Russia is committed to refraining from nuclear cooperation with

any country that lacks comprehensive International Atomic Energy

Agency safeguards on all its nuclear facilities. India, which has a nuclear

weapons program, does not have such safeguards on all its facilities,

although it does have safeguards on the Tarapur reactors. Although Russia

justified the fuel supply to Tarapur based on a safety exemption to this

commitment, 32 of 34 Nuclear Suppliers Group members declared at a

special meeting in December 2000 that this shipment would be

inconsistent with Russia’s commitments to the Nuclear Suppliers Group.

The fuel transfer occurred, nonetheless. Several countries and the

Regimes Lack Means to

Enforce Compliance with

Commitments
Page 24 GAO-03-43 Nonproliferation

European Union sent demarches (diplomatic notes) to Russia protesting

the sale. The Department of State issued a February 2001 public statement

that “condemned Russia’s disregard of its Nuclear Supplier Group

commitments and urged Russia to live up to its nonproliferation

obligations.”

Based on publicly available information, we found examples of other

questionable exports by Russia involving nuclear exports to Iran and

missile technology exports to Iran, India, China, and Libya. While these

cases were more ambiguous than the Tarapur case, they also raise

concerns over Russia’s compliance with its commitments. In addition, the

Department of State has provided at least 34 demarches to 11 other

members of the regimes from 1998 to 2002, questioning whether their

proposed exports were consistent with regime commitments.

Several U.S. and foreign government officials said that members’

compliance with regime commitments cannot be enforced for several

reasons. First, according to the Department of State, it is difficult to apply

the concept of enforcement to informal political commitments, such as the

export control regimes. Second, members’ commitments to the regimes

are sometimes vague or left to the interpretation of each member state.

Third, officials of several governments stated that it is difficult to identify

when a foreign government is not complying with its commitments

because knowing whether an illicit technology transfer occurred with or

without prior government knowledge is sometimes impossible. Fourth, it

is difficult to encourage countries to comply with their regime

commitments because there is disagreement over which states are

countries of concern, according to some foreign government officials.

The rapid pace of technological change in a globalized world economy

complicates efforts to keep control lists current because these lists need

to be updated more frequently. The current world economy is

characterized by rapid technological innovation, globalization of business,

and the internationalization of the industrial base, according to a 2001

study.22 The globalization of defense and commercial production activities

has made advanced military capabilities and related commercial goods

and technologies more widely available to many countries or subnational

 22Study Group on Enhancing Multilateral Export Controls For US National Security:

Final Report, April 2001 (The Henry L. Stimson Center, Washington, D.C.).

Technological Change and

Growing Supply of

Sensitive Items from

Proliferators Complicates

Efforts to Harmonize

Export Controls
Page 25 GAO-03-43 Nonproliferation

groups. This has narrowed the technology gap between the United States

and other nations.23

Rapidly evolving technologies have particularly impacted such areas as

high-performance computers, semiconductor manufacturing, and

information technologies. Several industry representatives and U.S. and

foreign government officials said that legislative or regulatory changes

modifying or removing items from control lists that no longer can be

effectively controlled cannot keep pace with rapid technology changes. As

a result, the Wassenaar Arrangement, which seeks to control items in

these technologies, has experienced prolonged discussion and

disagreements over how or even whether to maintain such items as high

performance computers on its control lists. In addition, MTCR members

have disagreed on revising parameters of items to control, such as cruise

missiles and unmanned aerial vehicles, allowing some members to seek

controversial cruise missile sales to nonmembers.

In addition, the trade of controlled items among nonmember countries

with indigenous WMD programs undermines regime efforts to effectively

restrict the exports of sensitive goods and technology. Government

officials of each of the regimes expressed their concern over “secondary

proliferation,” the growing capability of proliferators to develop WMD

technologies and trade them with other countries of concern. Traditional

recipients of WMD and missile technology such as India, Pakistan, North

Korea, and Iran could emerge as new suppliers of technology and

expertise to countries of concern, according to an unclassified 2002 report

by the Director of Central Intelligence. They are not members of

multilateral export control regimes and do not adhere to their standards.

For example, North Korea has exported significant ballistic missile-related

equipment, components, materials, and technical expertise to countries in

South Asia, North Africa, and the Middle East, including Iran. In August

2002, the Under Secretary of State for Arms Control and International

Security called North Korea “the world’s foremost peddler of ballistic

missile-related equipment, components, materials, and technical

expertise.” To counter this trend, officials of some regime member states

expressed a desire to have all supplier countries join the regimes to

encourage them to conform to regime standards and limit the proliferation

 23We reported on this phenomenon in our report, U.S. General Accounting Office, Export

Controls: Rapid Advances in China’s Semiconductor Industry Underscore Need for

Fundamental U.S. Policy Review, GAO-02-260 (Washington, D.C.: April 19, 2002).
Page 26 GAO-03-43 Nonproliferation

of sensitive technologies. Other officials recognized, however, that such

countries would not satisfy membership criteria and would run the risk

that the cohesiveness of like-minded memberships would be eroded.

Neither the U.S. government, member governments in the regimes whom

we contacted, nor the regimes have established explicit criteria for

assessing the regimes’ effectiveness. Nonetheless, the U.S. government has

an established policy of strengthening the effectiveness of the multilateral

export control regimes.24 Various U.S. government officials, including the

President and the under secretaries and assistant secretaries of State and

Commerce have stated the policy in public speeches or in written

testimony before Congress. Furthermore, while neither these governments

nor regimes made any evaluation of the regimes’ effectiveness, they have

asserted that the regimes are effective.25 The importance of developing

criteria to assess regime effectiveness is underscored by the Export

Administration Act of 2001.26 Pending before the Congress at the time of

this report, this act would require monitoring of and annual reporting on

the regimes’ effectiveness.

Some U.S. and foreign government officials noted several possible

limitations to an effort to assess the effectiveness of the regimes. First,

multilateral export control regimes could not be assessed separately from

the entire nonproliferation system, including national export enforcement

systems and treaties. Second, demonstrating the effectiveness of the

regimes would depend on being able to prove that the international

community would be worse off without the regimes than with them. Third,

several government officials and industry representatives noted that the

mission, obligations, and political commitment of the Wassenaar

Arrangement are not as clear as those of the other regimes. Thus,

assessing the effectiveness of this regime would be especially problematic.

 24The Under Secretary of Commerce for Industry and Security publicly announced in

September 2001 that the effectiveness of the regimes would be strengthened by

(1) improving timeliness and content of required reporting, (2) adopting a formal denial

consultation procedure, and (3) adopting “catch-all” controls.

25Although the Wassenaar Arrangement has a process for assessing the Arrangement every

3 years, its 1999 assessment produced many proposals for improving the Arrangement but

no evaluation of the arrangement’s effectiveness.

26S. 149, Section 501 (b) and H.R. 2581, Section 501 (b).

Lack of Explicit Criteria

Poses Obstacles to

Strengthening Regimes
Page 27 GAO-03-43 Nonproliferation

Notwithstanding these possible limitations to an effort to assess the

effectiveness of the regimes, some foreign and U.S. government officials

have proposed criteria to do so. The proposed criteria include the

following:

• clarity of each regime’s mission, obligations, and political commitment;

• quality, quantity, and timeliness of regime information exchanged,

including denial notifications;

• strength of no-undercut provisions;

• willingness and ability of the regime to adapt its practices and common

control lists to deal with new proliferation challenges;

• number of participants and level of their participation;

• level of compliance with regime standards;

• existence of guidelines for licensing and enforcement; and

• criticism from nonmembers—specifically proliferators—as evidence of a

regime’s effectiveness.

Strengthening multilateral export control regimes would help them better

meet the U.S. national security objective of preventing the proliferation of

weapons of mass destruction and conventional weapons to countries of

concern and terrorists. A key function of each regime is sharing

information related to proliferation. Yet the regimes often lack even the

basic information that would allow them to assess whether their actions

were working as intended. The regimes cannot effectively limit or monitor

efforts by proliferators to acquire sensitive technology without more

complete and timely reporting of licensing information and without more

information on when and how members adopt and implement agreed-upon

controls. Addressing these deficiencies would enhance the regimes’ ability

to accomplish their nonproliferation goals. However, the consensus-based

and voluntary nature of these regimes poses organizational and political

obstacles to implementing needed reforms. In addition, the lack of explicit

criteria to assess regime effectiveness will make it difficult to determine

the success of any effort to strengthen the regimes. While the regimes have

adapted to changing threats or conditions in the past, their continued

ability to do so may determine whether the regimes remain viable in

Conclusion
Page 28 GAO-03-43 Nonproliferation

curbing proliferation in the future. However, the United States lacks a

coherent strategy to address the regimes’ common weaknesses and

overcome the organizational and political obstacles to strengthening their

effectiveness.

To help the multilateral export control regimes achieve their stated goals

and objectives, we recommend that the Secretary of State establish a

strategy to work with other regime members to enhance the effectiveness

of the multilateral export control regimes. This strategy should identify

steps regime members should take to

(1) improve information-sharing by

• establishing clearly defined standards for reporting export denials on a

more complete and timely basis;

• sharing greater and more detailed information on approved exports of

sensitive transfers to nonmember countries; and

• adopting automated information-sharing systems in the MTCR and

Australia Group to facilitate more timely information exchanges.

(2) adopt and implement agreed-upon regime changes to export controls

more consistently by

• setting guidelines for when each regime member should adopt control list

changes into national laws and regulations and making this information

available to all members;

• tracking when members adopt regime changes into national law and

regulations and making information on the timing and content of these

changes available to the membership;

• establishing minimal standards for an effective national export control

system; and

• periodically assessing each member’s national export control system

against these standards and reporting the results of these assessments to

the regime;

Recommendations for

Executive Action
Page 29 GAO-03-43 Nonproliferation

(3) identify potential changes in policies and procedures by

• assessing alternative processes for reaching decisions,

• evaluating means for encouraging greater adherence to regime

commitments, and

• conducting an annual self-assessment of regime effectiveness.

To ensure that the United States is reporting all relevant information to the

multilateral export control regimes, as expected, we recommend that the

Secretary of State report U.S. denials of all export licenses for items

controlled by a multilateral export control regime at the time the exporter

is informed of the U.S. government’s intent to deny an export license.

To enable the U.S. government to better implement its policy of

strengthening the effectiveness of the multilateral export control regimes,

we also recommend that the Secretary of State establish criteria to assess

the effectiveness of the multilateral export control regimes.

We provided a draft of this report to the Secretaries of Commerce,

Defense, Energy, and State for their review and comment. We received

written comments from the Departments of Commerce, Energy, and State

that are reprinted in appendixes VI, VII, and VIII. The Department of

Defense declined to provide us with written comments. The Department of

State also provided us with technical comments, which we incorporated as

appropriate.

The Department of Commerce agreed with our findings, conclusions, and

recommendations. Commerce agreed that strengthening the multilateral

export control regimes would serve U.S. national security objectives. In its

written comments, the Department of Energy indicated that it had no

comments on the report. The Department of State said that it will give due

regard to our recommendation to work with other regime members to

establish a strategy for enhancing the effectiveness of the multilateral

export control regimes. State also agreed with our conclusion that

information sharing of export licensing is an important element of regime

activity.

However, State asserted that our report overall did not reveal any

shortcomings of nonproliferation significance. In fact, our report

highlighted the inability of the regimes to enforce Russia’s compliance

Agency Comments

and Our Evaluation
Page 30 GAO-03-43 Nonproliferation

with its regime commitments, a matter of major nonproliferation

significance. Our report also identified several specific weaknesses in the

processes the regimes use to share information about each other’s

licensing decisions and to implement regime decisions. Weaknesses in

regime processes undermine the regimes’ effectiveness in meeting

nonproliferation purposes.

We are sending copies of this report to appropriate congressional

committees and to the Secretary of Commerce, Secretary of Defense,

Secretary of Energy, and Secretary of State. Copies will be made available

to others upon request. In addition, this report will be available at no

charge on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-8979 if you or your staff has any questions

concerning this report. A GAO contact and staff acknowledgments are

listed in appendix IX.

Joseph Christoff, Director

International Affairs and Trade
Appendix I: Scope and Methodology

Page 31 GAO-03-43 Nonproliferation

To describe accomplishments of the multilateral export control regimes,

we reviewed analyses and documents prepared by the Departments of

State, Commerce, Defense, the intelligence community, and

nonproliferation specialists in academia. We also reviewed the database of

the Monterey Institute for International Studies. Also, we reviewed

plenary, working group, and information exchange documents of the

Australia Group, MTCR, Nuclear Suppliers Group, and Wassenaar

Arrangement. We met with officials of the Departments of State,

Commerce, Defense, and Energy, and the intelligence community in

Washington, D.C.; the Department of Energy’s Los Alamos National

Laboratory in Los Alamos, New Mexico; and the Center for

Nonproliferation Studies of the Monterey Institute for International

Studies in Monterey, California. We also met with officials of the

governments of Australia, Austria, Canada, France, Japan, the

Netherlands, New Zealand, and the United Kingdom. In addition, we

received written responses to questions we provided to the governments

of Canada, Japan, Germany, Russia, and Hong Kong. Also, we met with

representatives of the points of contact for the MTCR in Paris, France; and

the Nuclear Suppliers Group in Vienna, Austria; the Secretariats of the

Australia Group in Canberra, Australia; and of the Wassenaar

Arrangement, including the Director General, in Vienna, Austria. Also, we

interviewed representatives of American companies from the Alliance for

Network Security, American Electronics Association, Association for

Manufacturing Technology, American Chemistry Council, and Nuclear

Energy Institute. We also met with representatives of the International

Atomic Energy Agency and the Zangger Committee in Vienna, Austria; and

of the Organization for the Prohibition of Chemical Weapons in The

Hague, The Netherlands, to identify the relationship between the regimes

and those organizations.

To assess weaknesses of the multilateral export control regimes, we

analyzed documents and studies noted above and met with officials and

representatives of the previously mentioned governments and

organizations. In addition, we reviewed listings of denial notifications for

all the regimes and approval notifications for the Wassenaar Arrangement

to try to identify timeliness and completeness of reporting. In trying to

identify the amount of time for members to report denials to each regime,

we learned that the regimes do not maintain this data in a manner that

allows such an analysis. The Department of State confirmed this limitation

in July 2002. We analyzed and compared both the means and frequency

with which regime points of contact or secretariats distribute the export

denial and, in the case of the Wassenaar Arrangement, approval

notifications to the membership. We also identified which countries have

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 32 GAO-03-43 Nonproliferation

and have not reported export denials and the percentages of export

denials for each country that has reported them. We also reviewed

regulations of the governments of the United States, Japan, and the

European Union to determine the time it took to incorporate the most

recent changes from the regimes into regulations.

To identify obstacles that the United States faces in strengthening the

regimes, we analyzed the documents and studies noted above and met

with officials and representatives of the noted governments and

organizations. We could not fully assess how regime members comply

with their commitments or how well efforts to encourage compliance

work because of limited access to key Department of State data. Even

though 22 U.S. Code Section 2593a requires a report to the Congress each

January discussing compliance of countries with various arms control

agreements, including the MTCR, the 2000 and 2001 reports have not yet

been provided to Congress; and the Department of State declined to

provide us access to the report drafts. Consequently, we could not review

the reports to determine how other countries are complying with this

regime. In addition, we could not fully assess how diplomatic pressure has

worked overall to stop questionable transfers of items to nonmember

countries for two reasons. The Department of State could not tell us (1)

how many demarches in total the United States has provided to other

regime members and (2) whether the questionable transfers that the

demarches protested were or were not stopped in each case. Although

State provided us with about 100 demarches concerning questionable

exports from 1998 to 2002, officials from the Departments of Defense and

Commerce indicated that the United States delivered an estimated 100

demarches to MTCR members alone, in 2001.

We channeled all requests for regime information and documentation

through the Department of State and experienced significant delays in

obtaining these documents from the Department. After presenting State

with an initial document request in September 2001, we reduced the scope

of that request in October 2001 to accommodate State’s concerns about

the size of the request. In response to the revised request, one State office

provided requested documents by December 2001 and was prompt in

fulfilling our subsequent requests for documents. Nonetheless, we

continued to experience delays from all other State offices in receiving

access to documents over the next 7 months. State officials attributed

these delays to the Department’s time-consuming process of reviewing

every document multiple times before agreeing to provide us with access.
Appendix I: Scope and Methodology

Page 33 GAO-03-43 Nonproliferation

We performed our work from August 2001 to September 2002 in

accordance with generally accepted government auditing standards.
Appendix II: List of Members of Multilateral

Export Control Regimes

Page 34 GAO-03-43 Nonproliferation

Country Australia Group MTCRa

Nuclear Suppliers

Group

Wassenaar

Arrangement

Number of

Regimes

Argentina ●● ● ● 4

Australia ●● ● ● 4

Austria ●● ● ● 4

Belarus ● 1

Belgium ●● ● ● 4

Brazil ● ● 2

Bulgaria ● ●● 3

Canada ● ●●● 4

Cyprus ● ● 2

Czech Republic ●● ● ● 4

Denmark ●● ● ● 4

Finland ●● ● ● 4

France ● ● ● ● 4

Germany ●● ● ● 4

Greece ●● ● ● 4

Hungary ●● ● ● 4

Iceland ● ● 2

Ireland ●● ● ● 4

Italy ●● ● ● 4

Japan ● ●●● 4

Kazakhstan ● 1

Latvia ● 1

Luxembourg ●● ● ● 4

Netherlands ●● ● ● 4

New Zealand ● ● ● ● 4

Norway ●● ● ● 4

Poland ●● ● ● 4

Portugal ●● ● ● 4

Romania ● ●● 3

Russia ●●● 3

Slovakia ● ●● 3

Slovenia ● 1

South Africa ● ● 2

South Korea ●● ● ● 4

Spain ●● ● ● 4

Sweden ●● ● ● 4

Switzerland ●● ● ● 4

Turkey ●● ● ● 4

Ukraine ● ● ● 3

Appendix II: List of Members of Multilateral

Export Control Regimes
Appendix II: List of Members of Multilateral

Export Control Regimes

Page 35 GAO-03-43 Nonproliferation

Country Australia Group MTCRa

Nuclear Suppliers

Group

Wassenaar

Arrangement

Number of

Regimes

United Kingdom ●● ● ● 4

United States ●● ● ● 4

Total 33 33 40 33

Legend:

● represents the regimes applicable to each listed country.

a

Countries pledging to abide by MTCR guidelines include the People’s Republic of China, Israel,

Romania, and Slovakia.

Sources: Center for International Trade and Security, Nonproliferation Export Controls: A Global

Evaluation, 2001 and the Australia Group, Nuclear Suppliers Group, MTCR, and Wassenaar

Arrangement.
Appendix III: Reporting Practices of

Multilateral Export Control Regimes

Page 36 GAO-03-43 Nonproliferation

Regime

Denied exports

reported

Expected time frames for members

to report denied exports

“No undercut” policy in

effect

Australia Group Yes No Yes

MTCR Yes No Yes

Nuclear Suppliers

Group

Yes No Yes

Wassenaar

Arrangement

Yes Yesa

Aggregate denials within 90 days of 6-month

reporting period;

Individual denials within 30 days but no longer

than 60 days from date of denial

No

a

The Wassenaar Arrangement calls for two types of export denial reporting: export denials in

aggregate form for less sensitive (basic) items (about 76 percent of items) on the dual-use control list

and individual export denials for sensitive items (about 24 percent of items) on the dual-use control

list.

Source: GAO analysis based on guidelines of regimes.

Appendix III: Reporting Practices of

Multilateral Export Control Regimes
Appendix IV: Comparison of Control Lists of

Multilateral Export Control Regimes

Page 37 GAO-03-43 Nonproliferation

Each regime and treaty-related organization maintains lists of sensitive

items to be monitored and controlled, but the purpose and composition of

each list differs. The Chemical Weapons Convention list of chemicals was

intended to be as comprehensive as possible, primarily related to

countries’ declarations and destruction of their chemical weapons; and its

provisions on transfers have a different goal from that of the Australia

Group, according to officials of the Organization for the Prohibition of

Chemical Weapons. Also, 20 Australia Group chemicals are not on the

Chemical Weapons Convention list, although families of chemicals are

listed. Finally, the Chemical Weapons Convention list does not focus on

chemical equipment and transfers, but the Australia Group list does.

Table 3: Regime Control Lists and Items: Australia Groupa

Description of List Items Examples of Items on the List

• 54 dual-use chemical precursors

• Dual-use chemical weapons-related production equipment

• 94 pathogens and toxins that affect humans, livestock animals,

and/or food plants

• Dual-use biological production equipment

Chemical:

• Thiodiglycol

• Reaction vessels, reactors, or agitators

• Heat exchangers or condensers

• Multiwalled piping

Biological:

• Ebola virus

• Bacillus anthracis

• Centrifugal separators

• Aerosol inhalation chambers

a

The United States had not yet published regulations incorporating changes from the June 2002

Australia Group plenary at the time of this report. The changes include the addition of eight toxins to

the biological agents core list. The new total will be 102 once revised regulations have been issued.

Source: Australia Group.

Appendix IV: Comparison of Control Lists of

Multilateral Export Control Regimes
Appendix IV: Comparison of Control Lists of

Multilateral Export Control Regimes

Page 38 GAO-03-43 Nonproliferation

Table 4: Regime Control Lists and Items: MTCR

Description of List Items Examples of Items on the List

MTCR equipment and technology annex:

• 196 items in two categories. Category I Annex items include

complete missile systems, as well as major subsystems such

as rocket stages, engines, guidance sets, and reentry vehicles

and are rarely licensed for export. Transfers of production

facilities for Category I items are prohibited absolutely.

Category II Annex items include other missile related

components, including cruise missiles and unmanned aerial

vehicles, not covered in Category I.

Category I— complete missile systems, as well as major

subsystems:

• Individual rocket stages

• Reentry vehicles

• Solid or liquid fuel rocket engines

• Guidance sets

• Thrust vector controls

• Warhead safing, arming, fuzing, and firing mechanisms

Category II— other missile related components:

• Propulsion components

• Propellants and constituents

• Propellant production technology and equipment

• Missile structural composites: production technology and

equipment

• Avionics equipment

• Reduced observables technology, materials, and devices

Source: MTCR.

Table 5: Regime Control Lists and Items: Nuclear Suppliers Groupa

Description of List Items Examples of Items on the List

• Part 1 guidelines provide an annexed list (“Trigger List”) of 89

items of nuclear materials and equipment that if exported require

that the recipient country have in place a full-scope safeguards

agreement with the International Atomic Energy Agency

• 67 items in part 2 consisting of exports of nuclear-related,

dual-use equipment, materials, and related technology

Part 1—

• Special fissionable material

• Nuclear reactors and equipment

• Plants and equipment for reprocessing irradiated fuel

elements

• Plants and equipment for separation of uranium isotopes

Part 2—

• Machine tools

• Materials (beryllium)

• Lasers, laser amplifiers, and oscillators

• Flash x-ray equipment

a

The Nuclear Suppliers Group maintains two lists of controlled items: a list of items, called the

“Trigger List,” whose export would require international safeguards to all nonnuclear weapons states;

and a list of dual-use items. In contrast, the Zangger Committee maintains only a Trigger List of items

whose export would require international safeguards, such as inspections and monitoring equipment,

to nonnuclear weapons states that have not signed the Nuclear Nonproliferation Treaty. In 1971, a

group of nuclear supplier countries known as the Zangger Committee came together to agree on how

to implement and consistently interpret their obligations under Article III.2, a provision of the Nuclear

Nonproliferation Treaty. Memberships of both regimes are similar; a significant difference is that

China is a member only of the Zangger Committee. We did not review the activities of the Zangger

Committee except as they relate to the Nuclear Suppliers Group.

Source: Nuclear Suppliers Group.
Appendix IV: Comparison of Control Lists of

Multilateral Export Control Regimes

Page 39 GAO-03-43 Nonproliferation

Table 6: Regime Control Lists and Items: Wassenaar Arrangement

Description of List Items Examples of Items on the List

• 541 items in Appendix 5 List of Dual-Use Goods and

Technologies Wassenaar Arrangement List 1

• 196 items in Munitions List

• 7 items in Appendix 3 Specific Information Exchange on Arms

Dual-use List

• General purpose integrated circuits

• Optical fibre communication cables, optical fibres and

accessories

• Marine acoustic systems, equipment, and specially designed

components

• Solid rocket propulsion systems

Munitions List—

• Bombs, torpedoes, rockets, missiles, and related equipment

and accessories, specially designed for military use

• “Military explosives” and fuels, including propellants, and

related substances

• Vessels of war, special naval equipment and accessories, as

follows, and components therefore, specially designed for

military use

• “Aircraft,” unmanned airborne vehicles, aero-engines and

“aircraft” equipment, related equipment and components,

specially designed or modified for military use

Source: Wassenaar Arrangement.
Appendix V: Some Factors Considered in

Accepting New Members to Regimes

Page 40 GAO-03-43 Nonproliferation

Groups Some factors to consider in reviewing potential members

Australia Group • Applicant must demonstrate an established, effective, and legally based system of national export

controls;

• Be a member in good standing of the Biological and Toxins Weapons Convention and Chemical

Weapons Convention;

• Demonstrated compliance with all multilateral treaties banning chemical and biological weapons

activities.

MTCR Whether a prospective new member

• has a legally based effective export control system that puts into effect the MTCR Guidelines and

procedures;

• administers and enforces such controls effectively;

• demonstrates a sustained and sustainable commitment to nonproliferation;

• would strengthen international nonproliferation efforts.

Nuclear Suppliers Group • Enforcement of a legally based domestic export control system that gives effect to the

commitment to act in accordance with the Nuclear Suppliers Group Guidelines;

• Ability to supply items (including items in transit) covered by the annexes to Parts 1 and 2 of the

Nuclear Suppliers Group Guidelines;

• Adherence to the Guidelines and action in accordance with them;

• Adherence to and compliance with one or more of various nonproliferation treaties, including the

Nuclear Nonproliferation Treaty or equivalent international nuclear nonproliferation agreement;

• Support of international efforts towards nonproliferation of WMD and of their delivery vehicles.

Wassenaar Arrangement • A state’s adherence to fully effective export controls;

• Whether a state is a producer/exporter of arms or industrial equipment, respectively;

• A state’s nonproliferation policies, control lists, and, where applicable, guidelines of the Nuclear

Suppliers Group, the MTCR and the Australia Group; and through adherence to the Nuclear

Nonproliferation Treaty, the Biological and Toxicological Weapons Convention, the Chemical

Weapons Convention and (where applicable) START I, including the Lisbon Protocol.

Sources: Unclassified sources are the State Department Web site http://www.state.gov/t/np/rls/fs/

2001/3528.htm; MTCR Web site http://www.mtcr.info/english/partners.html; International Atomic

Energy Agency Web site http://www.nuclearsuppliersgroup.org/member.htm; and Wassenaar

Arrangement Web site http://www.wassenaar.org/docs/IE96.html.

Appendix V: Some Factors Considered in

Accepting New Members to Regimes
Appendix VI: Comments from the Department

of Commerce

Page 41 GAO-03-43 Nonproliferation

Appendix VI: Comments from the

Department of Commerce
Appendix VII: Comments from the

Department of Energy

Page 42 GAO-03-43 Nonproliferation

Appendix VII: Comments from the

Department of Energy
Appendix VIII: Comments from the

Department of State

Page 43 GAO-03-43 Nonproliferation

Appendix VIII: Comments from the

Department of State

Note: GAO comments

supplementing those in

the report text appear at

the end of this appendix.
Appendix VIII: Comments from the

Department of State

Page 44 GAO-03-43 Nonproliferation

See comment 2.

See comment 1.
Appendix VIII: Comments from the

Department of State

Page 45 GAO-03-43 Nonproliferation

See comment 6.

See comment 5.

See comment 4.

See comment 3.
Appendix VIII: Comments from the

Department of State

Page 46 GAO-03-43 Nonproliferation

See comment 8.

See comment 7.
Appendix VIII: Comments from the

Department of State

Page 47 GAO-03-43 Nonproliferation

The following are GAO’s comments on the Department of State letter

dated October 16, 2002.

1. The Department provided examples of the commitments that

governments make when they become members of the multilateral

export control regimes. However, simply listing the types of export

control commitments these members make says nothing about how

these commitments are implemented in practice and whether they are

effective. Therefore, it is unclear how State can contend that regime

members are effectively implementing regime commitments.

2. We agree with State that proliferators must often look to nonregime

suppliers to obtain materials and equipment and discussed this issue in

our report.

3. We agree that it is important for regime members to share information

on trends in proliferation, procurements, the use of front companies,

and end users of concern. We also believe that it is important to

collect and share comprehensive licensing information on sensitive

export transfers and denials—the building blocks for assessing these

broader trends.

4. The Department stated that it sees no utility in sharing increased

information about export approvals to nonregime members. This

statement is inconsistent with its current policy and practice. For

example, on October 11, 2002, the Deputy Assistant Secretary of State

for Nonproliferation stated that regime members should share more

information on export approvals to facilitate monitoring of regime

member compliance with their “no undercut” commitments.

Moreover, the U.S. government has led efforts to increase this type of

information sharing in two regimes. The Wassenaar Arrangement

already expects members to share information on export approvals,

and the U.S. government submitted a proposal to the Nuclear

Supplier’s Group in 2002 that would provide for reporting export

approvals.

5. None of the regimes systematically tracks the time regime members

take to implement agreed-upon changes in their control lists. In the

absence of this tracking, State cannot demonstrate that time lags have

not resulted in proliferators’ obtaining controlled items or that the time

lags could not contribute to proliferation.

GAO Comments
Appendix VIII: Comments from the

Department of State

Page 48 GAO-03-43 Nonproliferation

6. We agree that catch-all controls have been a critical factor in inhibiting

proliferators’ attempts to acquire items not on regime control lists.

However, as noted in our report, different country standards hamper

effective implementation and complicate law enforcement

cooperation.

7. Our report already acknowledges that decisions based on consensus

are a double-edged sword. As we noted, while the need for consensus

hampers the adoption of important decisions, it can also prevent

regime members from adopting a position that the United States

opposes.

8. During our review, we did not identify any systematic or formal

assessments of regime effectiveness routinely conducted by the

regimes or their members. Rather, regime statements sometimes

assert the effectiveness of the regimes but, as we reported, have

established no agreed upon criteria against which these assertions can

be assessed.
Appendix IX: GAO Contact and Staff

Acknowledgments

Page 49 GAO-03-43 Nonproliferation

Stephen Lord (202) 512-4379

In addition to the individual named above, Jeffrey D. Phillips, Eugene

Beye, Lynn Cothern, Nanette Ryen, and Richard Seldin made key

contributions to this report.

Appendix IX: GAO Contact and Staff

Acknowledgments

GAO Contact

Acknowledgments

(320073)
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