2008 REPORT ON FOREIGN POLICY-BASED EXPORT CONTROLS 

 

U.S. Department of Commerce 

Bureau of Industry and Security 

 Table of Contents 

 

Chapter 1 Introduction p. 1 

Chapter 2 Crime Control/Human Rights p. 7 

Chapter 3 Regional Stability p. 18 

 

Chapter 4 Anti-Terrorism Controls p. 25 

Chapter 5 Embargoes and Other Special Controls p. 31 

Chapter 6 Toxic Chemicals, Chemical Precursors and Associated 

Equipment, Technology and Software p. 64 

Chapter 7 Biological Agents and Associated Equipment and Technology p. 72 

Chapter 8 Missile Technology Controls p. 78 

Chapter 9 Encryption p. 84 

Chapter 10 Significant Items: “Hot Section” Technology p. 89 

Chapter 11 Nuclear Nonproliferation p. 92 

Chapter 12 Surreptitious Listening p. 95 

Appendix I Summary of Public Comments on Foreign Policy Export Controls p. 99 

Appendix II Multilateral Export Control Regimes in 2007 p. 101 

Appendix III Selected Rules Published by the Department of Commerce in 2007 p. 102 
Chapter 1 Introduction 

CHAPTER 1 

Introduction

Export controls maintained for foreign policy purposes require annual extension according to the 

provisions of Section 6 of the Export Administration Act of 1979, as amended (the Act). 

Section 6(f) of the Act requires the President to submit a report to Congress to extend the 

controls. Such authority has been delegated to the Secretary of Commerce. Sections 6(b) and 

6(f) of the Act require the report to include certain considerations1

 and determinations2 with 

respect to the criteria established in those sections. This report complies with all of the 

requirements set out in the Act for extending, amending, or imposing foreign policy controls. 

The Department of Commerce is acting under the authority conferred by Executive Order 13222 

of August 17, 2001 (Executive Order), as extended by the Notice of August 15, 2007 (72 FR 

46137 (Aug. 16, 2007)). In that Executive Order, the President, by reason of the expiration of 

the Act, invoked his authority, including authority under the International Emergency Economic 

Powers Act (IEEPA), to continue in effect the system of controls that had been maintained under 

the Act. Under a policy of conforming actions under the Executive Order to those under the Act, 

the Department of Commerce, insofar as appropriate, is following the provisions of Section 6 of 

the Act with regard to extending foreign policy controls. 

With this report, all foreign policy export controls discussed herein are hereby extended for the 

period from January 21, 2008, to January 20, 2009. The Bureau of Industry and Security (BIS) 

of the Department of Commerce is taking this action pursuant to the recommendation of the 

Secretary of State. As further authorized by the Act, foreign policy export controls remain in 

effect for replacement parts and for parts contained in goods subject to such controls. The 

controls administered in accordance with procedures established pursuant to Section 309(c) of 

the Nuclear Nonproliferation Act of 1978 similarly remain in effect. 

Each chapter of this report describes a particular category of foreign policy controls and 

delineates modifications that have taken place over the past year. Although this report covers the 

2007 calendar year, most of the statistical data presented in the report are based on 

 1

 Section 6(b)(2) requires the Secretary to consider the criteria set forth in 

Section 6(b)(1) when extending controls in effect prior to July 12, 1985. In addition, the report 

must include the elements set forth in Sections 6(f)(2)(A) (purpose of the controls); 6(f)(2)(C) 

(consultation with industry and other countries); 6(f)(2)(D) (alternative means attempted); and 

6(f)(2)(E) (foreign availability).

2

 Section 6(b)(1) requires the Secretary to make determinations regarding the criteria set 

forth therein when imposing, extending, or expanding controls. The report must also contain the 

additional information required in Section 6(f)(2)(A), (C)-(E) (as set forth in footnote 1, supra).

1 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 1 Introduction 

Fiscal Year 2007 export licensing statistics, unless otherwise noted. BIS generates this 

data from the computer system it uses to process and track export license activity. Due to 

the tabulating procedures used by the system in accounting for occasional license 

applications that list more than one country or destination, the system has certain 

limitations as a means of gathering data. In addition, BIS bases the data in this report on 

values contained in issued export licenses. Such values may not represent the values of 

actual shipments made against those licenses, because in some cases an exporter may 

ship only a portion of the value of an approved license or may not ship at all. 

Certain goods, technology, and software described in this report also may require a 

license for national security purposes for export to certain destinations in accordance with 

Section 5 of the Act. 

Part I: Highlights in the 2008 Report

Anti-Terrorism (AT) Controls on Designated Terrorist States 

North Korea

On January 26, 2007, as a result of North Korea’s test launch of ballistic missiles in July 

2006, and testing of a nuclear device in October 2006, and consistent with United Nations 

Security Council Resolutions (UNSCRs) 1695 and 1718, the Department published in the 

Federal Register an amendment to the Export Administration Regulations (15 C.F.R. 

730-774 (2007)) (EAR) implementing changes in export controls with respect to North 

Korea (72 FR 3722). This amendment implemented license requirements for the export 

and reexport of all items subject to EAR to North Korea, with limited exceptions. 

Iran 

On July 12, 2007, the Department published in the Federal Register an amendment to the 

EAR to add five Iranian entities to the Entity List. The Department determined that three 

of these entities were involved in nuclear-related proliferation activities described in 

Section 744.2 of the EAR and two entities were involved in prohibited activities related 

to rocket systems and unmanned aerial vehicles described in Section 744.3 of the EAR. 

This determination was based upon the fact that all five entities are subject to sanctions 

pursuant to United Nations Security Council Resolution 1737 and Executive Order 

13382.

Embargoes and Other Special Controls 

Burma 

On October 24, 2007, the Department published in the Federal Register an amendment to 

the EAR imposing licensing requirements on items subject to the EAR for certain persons 

in Burma designated in Executive Order 13448 (72 FR 60248). The President issued 

Executive Order 13448 in response to Burma’s continued repression of democratic 

2 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 1 Introduction 

opposition. The amendment also moved Burma from Country Group B to Country 

Group D:1 and from Computer Tier 1 to Tier 3. 

Chemical and Biological Controls 

Changes Resulting from the 2007 Australia Group Plenary 

On September 12, 2007, the Department of Commerce published a final rule in the 

Federal Register (72 FR 52000) implementing changes made to the Commerce Control 

List (CCL) deriving from understandings reached at the June 2007 Australia Group (AG) 

Plenary meeting. Among other changes, the rule made conforming changes to the EAR 

and CCL as a result of Croatia joining the AG; and clarified treatment of exports to 

Macau as being identical to treatments of exports to China for export control purposes. 

Missile Technology Controls

Changes Resulting from the 2006 Missile Technology Control Regime Plenary 

On May 7, 2007, the Department published in the Federal Register an amendment to the 

EAR to implement changes to the Missile Technology Control Regime (MTCR) Annex 

that member countries agreed to at the October 2006 Plenary in Copenhagen, Denmark 

(72 FR 25680). The amendment clarified the control parameters on several dual-use 

items to make clear that the items were controlled when used in rockets, missiles, and 

unmanned aerial vehicles capable of a range of at least 300 kilometers, regardless of the 

payload. The amendment also added a new export control classification number (ECCN) 

-- 7A107 -- to control three axis magnetic heading sensors designed or modified to be 

integrated with flight control and navigation systems. 

Export Enforcement 

BIS export enforcement efforts focus on the most significant international threats facing 

U.S. national and homeland security, foreign policy, and economic interests: the 

proliferation of weapons of mass destruction (WMD), international terrorism and state 

sponsors of terrorism, and diversions of U.S. dual-use goods and technologies to 

unauthorized military end-uses. The ability of the United States to enforce the foreign 

policy controls that it imposes is one of the criteria that this report examines. Below are 

summaries of some of the more significant foreign policy-related enforcement cases that 

have occurred recently. 

Terrorist Dealings/Computer Exports to Libya and Syria

In October 2006, sentences were handed down in connection with prior convictions at 

trial of Infocom Corporation and its principals, the Elashi brothers, for dealing in the 

funds of a Specially Designated Terrorist, a high ranking official of the terrorist 

organization Hamas; and conspiracy to export computers and computer equipment to 

Libya and Syria. Basman Elashi was sentenced to 80 months imprisonment on October 

13, 2006; Ghassan Elashi was sentenced to 80 months imprisonment on October 12, 

2006; and Infocom itself was sentenced to two years probation on October 11, 2006. 

3 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 1 Introduction 

Two other Infocom principals were previously sentenced in January 2006. Hazim Elashi 

was sentenced to 60 months imprisonment, two years probation, and deportation from the 

United States on January 24, 2006; and Ihsan Elashi was sentenced to 72 months in 

prison and two years probation on January 25, 2006. At the time of his sentencing, Ihsan 

Elashi was serving a 48 month prison sentence following his 2002 conviction for 

violating a BIS Temporary Denial Order. BIS’s Office of Export Enforcement (OEE) 

conducted this investigation as a member of the North Texas Joint Terrorism Task Force. 

Aircraft Parts to Iran 

On July 30, 2007, Ali Khan, owner of TurboAnalysis, Phoenix, Arizona, was sentenced 

in U.S. District Court, Eastern District of New York, Brooklyn, in connection with his 

role in a conspiracy to illegally export aircraft components to Iran. Khan was sentenced 

by Judge John Gleeson to serve five years probation, perform 300 hours of community 

service, pay $1.4 million in forfeiture, and $100,000 in criminal fines. Khan previously 

pled guilty to one count of conspiracy to violate the International Emergency Economic 

Powers Act (Title 50 U.S.C. Sections 1701-1706), in violation of Title 18 U.S.C. Section 

371, in September of 2005. Khan also paid a $110,000 administrative fine pursuant to a 

Final Order signed on August 8, 2005, in connection with the aforementioned shipments. 

Payments to a Terrorist Organization 

On September 17, 2007, Chiquita Brands International Inc. was sentenced to pay a $25 

million criminal fine and five years probation to include an effective compliance and 

ethics program. The investigation of Chiquita involved illegal payments to a terrorist 

organization. From 1997 through 2004, Chiquita made monthly payments through its 

wholly owned Colombian subsidiary C.I. Bananos de Exportacion S.A. to the right wing 

paramilitary group Autodefensas de Columbia (AUC). The AUC was first designated as 

a Foreign Terrorist Organization by the State Department on September 10, 2001. The 

AUC was later designated as a Specially Designated Global Terrorist by the Office of 

Foreign Assets Control in October 2001. These designations made it a federal crime for 

Chiquita, as a U.S. corporation, to provide money to the AUC. In April 2003, Chiquita 

made a voluntary self-disclosure to the government of its payments to the AUC, giving 

rise to this investigation. 

Part II: Format of Analysis Used in Chapters 2-13 of this Report

Chapters 2-13 of this report describe the various export control programs maintained by 

the Department of Commerce for foreign policy reasons. Each of these programs is 

extended for another year. The analysis required for such an extension is provided in 

each chapter in the format described below. 

Export Control Program Description and Licensing Policy

This section defines the export controls maintained for a particular foreign policy purpose 

that are imposed or extended for the year 2007. Each of the following chapters describes 

the licensing requirements and policy applicable to a particular control. 

4 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 1 Introduction 

Analysis of Controls as Required by Section 6(f) of the Act

Section 6(f)(2) of the Act requires that the Secretary of Commerce describe the purpose 

of the controls and consider or determine whether to impose or extend foreign policy 

controls based on specified criteria, including consultation efforts, economic impact, 

alternative means, and foreign availability. For each control program, the Department of 

Commerce’s conclusions are based on the following required criteria: 

A. The Purpose of the Controls

This section provides the foreign policy purpose and rationale for each particular control. 

B. Considerations and/or Determinations of the Secretary of Commerce

This section describes the Secretary’s determinations or considerations with respect to the 

following criteria: 

1. Probability of Achieving the Intended Foreign Policy Purpose. Whether such 

controls are likely to achieve the intended foreign policy purpose in light of other factors, 

including the availability from other countries of the goods or technology subject to 

control, and whether the foreign policy purpose can be achieved through negotiations or 

other alternative means. 

2. Compatibility with Foreign Policy Objectives. Whether the controls are 

compatible with the foreign policy objectives of the United States and with overall U.S. 

policy toward the country or the proscribed end-use subject to the controls. 

3. Reaction of Other Countries. Whether the reaction of other countries to the 

extension of such export controls by the United States is likely to render the controls 

ineffective in achieving the intended foreign policy purpose or to be counterproductive to 

other U.S. foreign policy interests. 

4. Economic Impact on United States Industry. Whether the effect of the controls 

on the export performance of the United States, its competitive position in the 

international economy, the international reputation of the United States as a reliable 

supplier of goods and technology, or the economic well-being of individual U.S. 

companies exceeds the benefit to U.S. foreign policy objectives.3

 3

 Limitations exist when assessing the economic impact of certain controls 

because of the unavailability of data or because of the influence of other factors, e.g., 

currency values, foreign economic activity, or foreign political regimes, which may 

restrict imports of U.S. products more stringently than the United States restricts exports.

5 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 1 Introduction 

5. Effective Enforcement of Controls. Whether the United States has the ability to 

enforce the controls. Some enforcement problems are common to all foreign policy 

controls.4

 Other enforcement problems are associated with only one or a few controls. 

Each control has been assessed to determine if it has presented, or is expected to present, 

an uncharacteristic enforcement problem. 

C. Consultation with Industry

This section discusses the results of consultations with industry leading to the extension 

or imposition of controls. In a September 5, 2007, Federal Register notice (72 FR 

50912), the Department of Commerce solicited comments from industry on the 

effectiveness of U.S. foreign policy-based export controls. In addition, comments were 

solicited from the public via the BIS website. Comments from the Department’s six 

Technical Advisory Committees are solicited on an ongoing basis and are not specific to 

this report. The comment period closed on October 5, 2007, and three comments were 

received. A detailed review of all public comments received can be found in Appendix I. 

D. Consultation with Other Countries

This section reflects consultations on the controls with countries that cooperate with the 

United States on multilateral controls and with other countries as appropriate. 

E. Alternative Means

This section specifies the nature and results of any alternative means attempted to 

accomplish the foreign policy purpose, or the reasons for extending the controls without 

attempting any such alternative means. 

F. Foreign Availability

This section considers the availability from other countries of goods or technology 

comparable to those subject to the proposed export control. It also describes the nature 

and results of the efforts made pursuant to Section 6(h) of the Act to secure the 

cooperation of foreign governments in controlling the foreign availability of such 

comparable goods or technology. In accordance with the Act, foreign availability 

considerations do not apply to export controls in effect prior to June 12, 1985, to export 

controls maintained for human rights and anti-terrorism reasons, or to export controls in 

support of the international obligations of the United States. 

 4

 When the United States implements controls without the imposition of 

corresponding restrictions by other countries, it is difficult to prevent reexports from 

third countries to the target country, to secure third country cooperation in enforcement 

efforts, and to detect violations abroad and initiate proper enforcement action. 

6 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

7 

CHAPTER 2 

Crime Control/Human Rights 

(Sections 742.7, 742.11, 742.17)

1

Export Control Program Description and Licensing Policy

As required by Section 6(n) of the Export Administration Act of 1979, as amended, the 

United States controls the exports of crime control and detection items because of human 

rights concerns in various countries. The U.S. Government requires a license to export 

most crime control and detection instruments, equipment, related technology, and 

software to all destinations, except Australia, Japan, New Zealand, and members of the 

North Atlantic Treaty Organization (NATO). A license is required to export certain 

crime control items, including restraint type devices (such as handcuffs) and discharge 

type arms (such as tasers) to all destinations except Canada. Specially designed 

implements of torture and thumbscrews, which are part of the crime control category, 

require a license for export to all destinations. In addition, the U.S. Government 

maintains concurrent export license requirements for certain crime control items in 

furtherance of the Inter-American Convention Against the Illicit Manufacturing of and 

Trafficking in Firearms, Ammunition, Explosives, and other Related Materials. 

The Department is currently reviewing items controlled for crime control reasons to 

ensure that export controls are up to date with new products and technologies that are 

primarily or exclusively used for crime control and detection. The Department will 

consult with the Congress, other agencies, and the public as it conducts this review. 

Summary of 2007 Changes 

On March 6, 2007, the Department published in the Federal Register an amendment to 

the EAR to allow crime control items to be exported to any destination under License 

Exception GOV if consigned to and for the official use of a U.S. government agency (72 

FR 9847). The amendment also moved thumbcuffs from ECCN 0A982 to ECCN 0A983, 

which controls specially designed implements of torture and thumbscrews. The 

significance of the change is that under Section 741.11 of the EAR, items controlled 

under ECCN 0A983 are subject to a general policy of denial. It also added language 

explicitly stating that no license exception may be used to export or reexport specially 

designed implements of torture and thumbscrews. Finally, the amendment added 

 

1

 Citations following each of the foreign policy control programs refer to sections of the Export 

Administration Regulations (EAR), 15 CFR Parts 730-774, that describe the control program. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

8 

language explicitly stating that the geographic restriction on the use of License 

Exceptions applies to all crime control items, including software and technology.

Licensing Policy 

Crime Control/Implements of Torture

The U.S. Government has a general policy of denial for license applications to export 

crime control items to a country in which the government engages in a consistent pattern 

of gross violations of internationally recognized human rights. For other countries, the 

U.S. Government will consider applications for crime control items favorably, on a caseby-case basis, unless there is civil disorder in the country or region of concern, or there is 

evidence that the government may have violated human rights and that the judicious use 

of export controls would be helpful in minimizing regional instability, deterring the 

development of a consistent pattern of such violations, or in demonstrating U.S. 

Government opposition to such violations. 

The U.S. Government has a policy of denial for any license application to export 

specially designed implements of torture and thumbscrews. 

China

Following the 1989 military assault on demonstrators by the People’s Republic of China 

(PRC) in Tiananmen Square, the U.S. Government imposed constraints on the export to 

the PRC of certain items on the Commerce Control List (CCL). Section 902(a)(4) of the 

Foreign Relations Authorization Act for Fiscal Year 1990-1991, Public Law 101-246, 

suspends the issuance of licenses under Section 6(n) of the Act for the export of any 

crime control or detection instruments or equipment to the PRC. The President may 

terminate the suspension by reporting to Congress that China has made progress on 

political reform or that it is in the national interest of the United States to terminate the 

suspension. The President has not exercised his authority to terminate this suspension. 

Indonesia

The U.S. Government denies applications to export certain crime control items to 

Indonesia, subject to narrow exceptions, consistent with Section 582 of the Foreign 

Operations, Export Financing and Related Programs 1995 Appropriations and 1994 

Supplemental Appropriations Act (Public Law 103-306). This restriction could be lifted 

if the Secretary of State determines and reports to Congress that there has been significant 

progress made on human rights in East Timor and elsewhere in Indonesia. 

Rwanda

The U.S. Government maintains an embargo on the sale or supply of arms and related 

materiel to certain entities in Rwanda, consistent with United Nations Security Council 

Resolution 918 and the United Nations Participation Act. As a result, applications to 

export items controlled for crime control and detection reasons on the CCL to such 

entities are subject to a general policy of denial. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

9 

Ivory Coast

The U.S. Government maintains an embargo on the sale or supply of arms and related 

material to Ivory Coast (known formally as Côte d'Ivoire), consistent with United Nations 

Security Council Resolution 1572 and the United Nations Participation Act (see the 

Department of State’s Public Notice of December 14, 2004, published in the Federal 

Register (69 FR 74560)). The Department of Commerce already required a license to 

export items controlled on the CCL for crime control or regional stability reasons to Ivory 

Coast, under a licensing policy requiring case-by-case review. 

NATO

Certain crime control and detection instruments, equipment, related technology, and 

software may be exported to Australia, Japan, New Zealand, and members of the North 

Atlantic Treaty Organization (NATO) without a specific license, consistent with Section 

6(n) of the Export Administration Act. 

Organization of American States Member Countries

In April 1999, the Department of Commerce published a rule implementing the 

provisions of the Organization of American States (OAS) Model Regulations for the 

Control of the International Movement of Firearms. The Department designed these 

regulations to harmonize import and export controls on the legal international movement 

of firearms among OAS member states and to establish procedures to prevent the illegal 

trafficking of firearms among these countries. 

Under these provisions, the Department maintains foreign policy controls on exports of 

Commerce-controlled firearms, including shotguns with a barrel length of 18 inches or 

over and parts, buckshot shells, shotgun shells and parts, and optical sighting devices to 

all OAS member countries, including Canada. Items subject to these controls are 

identified by “FC Column 1” in the “License Requirements” section of the corresponding 

Export Control Classification Numbers. In support of the OAS Model Regulations, the 

U.S. Government requires an Import Certificate (IC) for the export to all OAS member 

countries of those items affected by the regulations. In general, the Department approves 

license applications for the export of firearms to OAS member countries if the application 

is supported by an IC. The Department denies applications that involve end-uses linked 

to drug trafficking, terrorism, international organized crime, and other criminal activities. 

Other Licensing Considerations

The Department of State annually compiles the Country Reports on Human Rights 

Practices. The Department of State prepares these reports in accordance with Sections 

116(d) and 502B(b) of the Foreign Assistance Act of 1961, as amended, for submission 

to Congress. The factual information presented in these reports is a significant element in 

licensing recommendations made by the Department of State. In accordance with the 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

10 

Foreign Assistance Act, there is a policy of denial for license applications to export crime 

control items to any country in which the government engages in a consistent pattern of 

gross violations of human rights. The most recent report, published in March 2007, 

marked several countries not otherwise subject to sanctions or embargoes for the intensity 

of their human rights problems, including Saudi Arabia, Russia, and Venezuela. Of note, 

targeted sanctions are currently in place against Belarusian and Zimbabwean regime 

officials and their supporters. Applications to export crime control items to these 

countries that are not otherwise sanctioned or embargoed have been flagged for 

additional scrutiny in response. The Department of State reviews all license applications 

for these countries on a case-by-case basis and makes recommendations to Commerce as 

it considers appropriate. 

The International Religious Freedom Act of 1998 (IRFA) calls for the President to take 

diplomatic or other appropriate action with respect to any country that engages in or 

tolerates violations of religious freedom. IRFA also provides for the imposition of 

economic measures or commensurate actions when a country has engaged in systematic, 

ongoing, egregious violations of religious freedom accompanied by flagrant denials of 

the rights to life, liberty, or the security of persons, such as torture, enforced and arbitrary 

disappearances, or arbitrary prolonged detention. For such countries, IRFA provides that 

the Department of Commerce, with Department of State concurrence, shall include items 

on the CCL for reasons of crime control or detection, and require export licenses for, 

items that are being used, or are intended for use, directly and in significant measure, to 

carry out particularly severe violations of religious freedom. In addition, the 

International Religious Freedom Act requires that those countries that engage in 

particularly severe violations of religious freedom be designated as Countries of 

Particular Concern (CPC). In May 2007, the Secretary of State redesignated eight 

countries as Countries of Particular Concern: Burma, China, the Democratic People's 

Republic of Korea, Eritrea, Iran, Saudi Arabia, Sudan, and Uzbekistan. These are 

countries where governments have engaged in or tolerated particularly severe violations 

of religious freedom over the past year. Applications to export crime control items to 

those countries that are not otherwise sanctioned or embargoed have been flagged for 

additional scrutiny in response. The Department of State reviews all license applications 

for those countries on a case-by-case basis and makes recommendations to Commerce as 

appropriate. The non-embargoed or sanctioned destinations will receive similar 

treatment in 2008. 

Analysis of Controls as Required by Section 6(f) of the Act

A. The Purpose of the Controls

These controls seek to ensure that U.S.-origin crime control equipment is not exported to 

countries where governments fail to respect internationally recognized human rights, or 

where civil disorder is prevalent. Denial of export license applications to such countries 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

11 

helps to prevent human rights violations and clearly signals U.S. concerns about human 

rights in these countries. The license requirements for most destinations allow for close 

monitoring of exports of certain crime control items that could be misused to commit 

human rights violations. Controls on implements of torture similarly help to ensure that 

such items are not exported from the United States. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including availability of relevant items from other 

countries, and that the foreign policy purpose cannot fully be achieved through 

negotiations or other alternative means. The lack of complementary controls by other 

producer nations limits the effectiveness of these controls in preventing human rights 

violations. However, the controls restrict human rights violators’ access to U.S.-origin 

goods and provide important evidence of U.S. support for the principles of human rights. 

In addition, the imposition of stringent licensing requirements for crime control items 

enables the U.S. Government to monitor closely items that could be used in human rights 

violations. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and that the extension 

of this control program will not have any significant adverse foreign policy 

consequences. This control program is fully consistent with U.S. policy in support of 

internationally recognized human rights, as expressed by successive Administrations and 

by Congress. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

These controls are unique, serve a distinct foreign policy purpose, and arise out of deeply 

held convictions of the U.S. Government. Currently, other countries do not have 

equivalent regulations, but many have restrictions on exports of lethal products to areas 

of civil unrest. 

4. Economic Impact on U.S. Industry. The Secretary has determined that any 

adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, does not exceed 

the benefit to U.S. foreign policy objectives. In Fiscal Year 2007, the Department of 

Commerce approved 3,364 export license applications valued at over $759 million for 

crime control items. Table 1 lists the total number and value (by ECCN) of export 

licenses that the U.S. Government issued for crime control items during Fiscal Year 

2007. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

12 

Table 1: CRIME CONTROL APPLICATIONS APPROVED (FY 2007)

ECCN Items Controlled Applications 

Approved

$ Value

0A978 Saps 2 $45,050 

0A979 Police helmets and shields 145 $17,600,741 

0A982 Restraint devices, e.g., leg 

irons, shackles, handcuffs 

390 $77,471,513 

0A983 Specially designed 

implements of torture 

0 $0 

 

0A984 Shotguns 665 $44,592,102 

0A985 Discharge type arms (stun 

guns, shock batons, etc.) 

307 $272,103,188 

0A986 Shotgun shells 212 $45,584,048 

0A987 Optical sighting devices 697 $71,772,567 

0E982 Technology for items under 

0A982/0A985 

1 $100 

0E984 Technology for items under 

0A984 

0 $0 

1A984 Chemical agents including 

tear gas containing 1% or less 

of CS or CN 

108 $13,357,738 

1A985 Fingerprinting powders, dyes, 

and inks 

208 $91,918,912 

 

3A980 Voice print identification and 

analysis equipment 

3 $8,143 

3A981 Polygraphs, fingerprint 

analyzers, cameras, and 

equipment 

382 $82,133,986 

3D980 Software for items under 

3A980 and 3A981 

191 $30,600,811 

3E980 Technology for items under 

3A980 and 3A981 

12 $255,766 

4A003* Digital computers for 

computerized fingerprint 

equipment only 

0 $0 

4A980 Computers for fingerprint 

equipment 

10 $8,433,750 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

13 

ECCN Items Controlled Applications 

Approved

$ Value

4D001* Software for items under 

4A003 only 

0 $0 

4D980 Software for items under 

4A980 

12 $2,358,820 

4E001* Technology for items under 

4A003 and 4D001 only 

0 $0 

4E980 Technology for items under 

4A980 

3 $2,502 

6A002.c* Police-model infrared viewers 

only 

8 $811,685 

6E001* Technology for development 

of items under 6A002c only 

4 $1,402 

6E002* Technology for production of 

items under 6A002c only 

4 $7,210 

9A980 Mobile crime science 

laboratories 

0 $0 

TOTAL 3,364 $759,060,034 

NOTES: (1) To give the reader the broadest perspective of the items covered, Table 1 

lists all crime control ECCNs including those for which no license applications were 

submitted. (2) Those ECCNs marked with an asterisk (*) list items that are controlled for 

crime control reasons and for other reasons, but the corresponding statistics represent 

only the crime control items within the ECCN. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

14 

In Fiscal Year 2007, the Department of Commerce denied 35 applications for crime 

control items with a total value of $3,039,718. The largest number of denials (9) was for 

shotguns controlled under ECCN 0A984, with a total value of $23,733. 

Table 2: CRIME CONTROL APPLICATIONS DENIED (FY 2007)

ECCN Description Applications 

Denied

$ Value

0A979 Police helmets and shields 3 $120,365 

0A982 Restraint devices, e.g., leg 

irons, shackles, handcuffs 

2 $36,337 

0A984 Shotguns 9 $23,733 

0A985 Discharge type arms (stun 

guns, shock batons, etc.) 

4 $94,350 

0A986 Shotgun shells 2 $150 

0A987 Optical sighting devices 6 $111,383 

0E982 Technology for items under 

0A982/0A985 

1 $1000 

1A984 Chemical agents including 

tear gas containing 1% or less 

of CS or CN 

1 $150,000 

1A985 Fingerprinting powders, dyes, 

and inks 

2 $57,500 

 

3A980 Voice print identification and 

analysis equipment 

1 $99,950 

3A981 Polygraphs, fingerprint 

analyzers, cameras, and 

equipment 

1 $99,950 

3D980 Software for items under 

3A980 and 3A981 

1 $1,200,000 

3E980 Technology for items under 

3A980 and 3A981 

1 $870,000 

4A980 Computers for fingerprint 

equipment 

1 $175,000 

TOTAL 35 $3,039,718 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

15 

In Fiscal Year 2007, the Department of Commerce approved 869 export license 

applications valued at slightly over $108 million for items affected by the foreign policy 

controls on firearms and ammunition instituted in 1999 in support of the OAS Model 

Regulations. The Department issued more licenses for Canada than for any other 

country, with 565 license applications approved in Fiscal Year 2007. The table below 

lists the number and value of export licenses that the Department of Commerce issued for 

firearms, ammunition, sights, and related items affected by the foreign policy controls 

applied to OAS countries in Fiscal Year 2007. 

TABLE 3: APPLICATIONS FOR FIREARMS, AMMUNITION, 

AND SIGHTS TO OAS COUNTRIES APPROVED IN FY 2007

ECCN Items Controlled Applications 

Approved

$ Value 

0A984 Shotguns and buckshot 

shotgun shells 

462 $36,089,471

0A986 Other shotgun shells 202 $45,311,954

0A987 Optical sighting 

devices for firearms 

205 $26,918,957

TOTAL* 869 $108,320,382

* NOTE: Items in 0A986 are controlled only for Firearms Convention reasons. Items in 

0A984 and 0A987, however, are controlled both for Firearms Convention and Crime 

Control reasons. The statistics in this table for 0A984 and 0A987 are a subset of the 

Crime Control statistics provided in Table 1 of this chapter. 

5. Effective Enforcement of Controls. The Secretary has determined that the 

United States has the ability to enforce these controls effectively. Crime control items 

and implements of torture are easily recognizable and do not present special enforcement 

problems related to detecting violations or verifying use. However, enforcement 

cooperation with other countries generally is difficult in cases involving unilaterally 

controlled items such as these, and often depends on the type and quantity of goods in 

question. In addition, enforcement of controls on reexports is challenging and rests in 

large part on the willingness of the recipient to abide by the terms of the export license. 

The U.S. Government conducts post-shipment verifications to ensure that the listed enduser has received the exports and to confirm that the end-user is using the controlled 

items in a way consistent with the license conditions. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

16 

C. Consultation with Industry

The Department of Commerce consults with the Regulations and Procedures Technical 

Advisory Committee (RPTAC), one of six technical advisory committees that advise the 

Bureau of Industry and Security (BIS), in preparation for publication of major regulatory 

changes affecting crime control. In addition, the Department of Commerce has consulted 

with exporters of crime control items and with human rights groups concerned about the 

potential for misuse of such items in various parts of the world. The Department has 

frequent consultations with exporters about specific items proposed for export to specific 

end-users and for specific end-uses. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

Most other countries that supply crime control and detection items have not imposed 

similar export controls. The United Kingdom and Canada maintain controls similar to 

U.S. controls on certain crime control commodities. Certain European Union memberstates prohibit or impose an authorization requirement on the export of dual-use items not 

covered by the multilateral export control regimes for reasons of public security or 

human rights considerations. 

E. Alternative Means 

Section 6(n) of the Act requires the Department of Commerce to maintain export controls 

on crime control and detection equipment. Attempting to achieve the purposes of the 

crime control restrictions through negotiations or other alternative means would not meet 

this requirement. The U.S. Government does, however, use diplomatic efforts, sanctions, 

and other means to convey its concerns about the human rights situation in various 

countries. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 2 Crime Control/Human Rights 

17 

F. Foreign Availability 

The foreign availability provision does not apply to Section 6(n) of the Act.2

 Congress 

has recognized the usefulness and symbolic value of these controls in supporting U.S. 

Government policy on human rights issues, foreign availability notwithstanding.

 

2 Provisions pertaining to foreign availability do not apply to export controls in effect 

before July 12, 1985, under Sections 6(i) (International Obligations), 6(j) (Countries 

Supporting International Terrorism), and 6(n) (Crime Control Instruments). See the 

Export Administration Amendments Act of 1985, Public Law No. 99-64, Section 

108(g)(2), 99 Stat. 120, 134-35. Moreover, Sections 6(i), 6(j), and 6(n) require that 

controls be implemented under certain conditions without consideration of foreign 

availability.

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

CHAPTER 3 

Regional Stability 

(Section 742.6) 

Export Control Program Description and Licensing Policy 

Regional stability (RS) controls ensure that exports and reexports of controlled items do 

not contribute to the destabilization of the region to which the items are destined. These 

controls traditionally cover items specially designed or modified for military purposes 

and certain dual-use commodities that can be used to manufacture military equipment. 

Licensing Policy 

Section 742.6 of the Export Administration Regulations (EAR) requires a license for RS 

reasons to export certain image-intensifier tubes, infrared focal plane arrays, as well as 

certain software and technology for inertial navigation systems, gyroscopes, and 

accelerometers, to all destinations except Canada. The U.S. Government reviews all 

license applications for these items on a case-by-case basis to determine whether the 

export could contribute, directly or indirectly, to a country’s military capabilities in a 

manner that would destabilize or alter a region’s military balance contrary to U.S. foreign 

policy interests. 

Section 742.6 of the EAR also requires a license for RS reasons to export explosive 

detection equipment and related software and technology, military-related items (e.g., 

certain vehicles and trainer aircraft), and certain commodities used to manufacture 

military equipment to all destinations except member nations of NATO, Australia, Japan, 

and New Zealand. The U.S. Government will generally consider applications for such 

licenses favorably, on a case-by-case basis, unless the export would significantly affect 

regional stability. 

In addition, there are regional stability controls in place for certain items exported to Iraq 

(or transferred within Iraq). These items are covered under the following Export Control 

Classification Numbers (ECCNs): 0B999 (specific processing equipment such as hot 

cells and glove boxes suitable for use with radioactive materials), ECCN 0D999 (specific 

software for neutronic calculations, radiation transport calculations, and hydrodynamic 

calculations/modeling), ECCN 1B999 (specific processing equipment, such as 

electrolytic cells for fluorine production and particle accelerators), ECCN 1C992 

(commercial charges containing energetic materials, n.e.s.), ECCN 1C995 (certain 

mixtures and testing kits), ECCN 1C997 (ammonium nitrate), ECCN 1C999 (specific 

materials, n.e.s.), and ECCN 6A992 (optical sensors not controlled under ECCN 6A002). 

18 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

Analysis of Controls as Required by Section 6(f) of the Act 

A. The Purpose of the Controls 

Regional stability controls provide a mechanism for the U.S. Government to monitor the 

export of controlled items, to restrict their use in instances that would adversely affect 

regional stability or the military balance within a region, and to protect the national 

security and foreign policy interests of the United States. 

B. Considerations and/or Determinations of the Secretary of Commerce 

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including foreign availability, and that the foreign 

policy purpose cannot fully be achieved through negotiations or other alternative means. 

The Secretary has also determined that most of the items subject to these controls are also 

controlled, as a result of international negotiations, by U.S. partners in the Wassenaar 

Arrangement and the Missile Technology Control Regime (MTCR). Regional stability 

controls contribute to U.S. national security and foreign policy objectives by enabling the 

United States to restrict the use or availability of certain sensitive U.S.-origin goods and 

technologies that would adversely affect regional stability or the military balance in 

certain areas. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and that the extension 

of these controls will not have any significant adverse foreign policy consequences. 

Regional stability controls are consistent with U.S. foreign policy goals to promote peace 

and stability and prevent U.S. exports that might contribute to weapons production, 

destabilizing military capabilities, or acts of terrorism. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

A number of other countries limit exports of items and technologies with military 

applications to areas of concern, recognizing that such items and technologies could 

adversely affect regional stability and military balances. For example, the United States 

and other member countries of the Wassenaar Arrangement each have their own national 

controls on the export of certain night vision devices. All members of the MTCR 

maintain controls on software and technology related to missile guidance and control 

devices. Although other countries may object to new unilateral RS controls, allies and 

partners of the United States support U.S. efforts against regional conflict and terrorism 

and appreciate the need to keep certain equipment and technologies from those who 

could misuse the items to destabilize countries or regions. 

19 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

4. Economic Impact on U.S. Industry. While the Secretary has determined that the 

adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, generally does not 

exceed the benefit to U.S. foreign policy objectives, the controls on cameras controlled 

by ECCN 6A003, which exceed the controls on similar products imposed by other 

producing countries, have significantly and adversely impacted the competitiveness of 

the affected industry sector. Items controlled for regional stability reasons generally 

require licenses for export to all destinations except NATO countries, Australia, Japan, 

and New Zealand. Certain RS-controlled items, including those controlled concurrently 

for missile technology reasons and cameras controlled under ECCN 6A003, however, 

require licenses for export to all destinations except Canada. Cameras controlled by 

ECCN 6A003 account for a large percentage of regional stability-controlled exports. 

Controls on these cameras have resulted in resulted in declining sales for U.S. companies 

in a rapidly growing global market. 

In Fiscal Year 2007, the Department of Commerce approved 3,066 license applications 

for items controlled for RS reasons, with a total value of $681 million. Eight applications 

were denied (three license applications for cameras controlled under ECCN 6A003; three 

license applications for military trainer aircraft and related equipment controlled under 

ECCN 9A018; and one license application each for power control searchlights or 

bayonets controlled under ECCN 0A918), with a total value of $423,845. 

Licensing volume for items controlled for RS reasons is somewhat lower than that for 

Fiscal Year 2006, during which the Department approved 3,421 license applications. 

This decline is attributable to fewer exports of cameras controlled under ECCN 6A003, 

which fell from 2,663 applications to 2,198. The value of RS-related licenses decreased 

from $1.0 billion in Fiscal Year 2006 to $681 million in Fiscal Year 2007, due to a 

significant decline in the value of exports of military trainers controlled under ECCN 

9A018. 

The table that follows lists the total number and value by ECCN of export licenses that 

the Department of Commerce issued for regional stability items during Fiscal Year 2007: 

Regional Stability Applications Approved (Fiscal Year 2007)

ECCN Description Number of 

Applications

Dollar Value

0A918 Power control searchlights and bayonets 3 $26,915

0B999* Specific processing equipment such as hot 

cells and glove boxes for use with 

radioactive materials 

0 $0

0D999* Specific software for neutronic 

calculations, et al. 

0 $0

20 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

ECCN Description Number of 

Applications

Dollar Value

0E918 Technology for development/production of 

bayonets 

0 $0

1B018.a Equipment for the production of military 

explosives and solid propellants 

2 $82,698

1B999* Specific processing equipment such as 

electrolytic cells for fluorine production et 

al. 

0 $0

1C992* Commercial charges containing energetic 

materials, n.e.s. 

2 $28,840,000

1C995* Certain mixtures and testing kits 3 $353,010

1C997* Ammonium nitrate 0 $0

1C999* Specific materials, n.e.s. 0 $0

2A983 Explosives detection equipment 276 $170,978,627

2B018 Equipment on the International Munitions 

List 

0 $0

2D983 Software for equipment in 2A983 46 $479,781

2E983 Technology for equipment in 2A983 29 $35,029

6A002.a.1

, a.2, a.3, 

c, e 

Optical detectors and direct view imaging 

equipment incorporating image intensifier 

tubes or focal plane arrays 

14 $837,642

6A003.b.

3,b.4

Imaging cameras incorporating image 

intensifiers or focal plane arrays 

2,198 $138,597,004

6A008.j.1 Space qualified LIDAR equipment 4 $7,429,014

6A992* Optical sensors not controlled under 

6A002 (gravity meters) 

3 $2,465,250

6A998.b Space-qualified LIDAR equipment for 

meteorological observation 

0 $0

6D001 Software for development/production of 

6A008.j.1 

0 $0

6D002 Software for the use of 6A008.j.1 0 $0

6D991 Software for development/production/use 

of 6A998.b 

0 $0

6E001 Technology for the development of 

equipment, materials, or software 

controlled by 6A, 6B, 6C, or 6D 

5 $1,403

6E002 Technology for the production of 

equipment or materials controlled by 6A, 

6B, or 6C 

4 $7,210

21 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

ECCN Description Number of 

Applications

Dollar Value

6E991 Technology for production, development 

or use of items in 6A998.b 

0 $0

7D001 Software for the development or 

production of equipment in 7A or 7B 

6 $63,001

7E001 Technology for the development of items 

in 7A, 7B, or 7D 

31 $6,304,483

7E002 Technology for the production of items in 

7A or 7B 

3 $12,501

7E101 Technology for the use of items in 7A, 7B, 

or 7D 

56 $173,934

8A918 Marine boilers 0 $0

9A018.a, 

b

Military trainer aircraft and vehicles 

designed or modified for military use 

361 $322,440,368

9E018 Technology for the development of items 

in 9A018.a, b 

20 $1,432,578

TOTAL 3,066 $680,560,448 

* Regional Stability control applies to exports to Iraq only, as do statistics 

NOTE: For ECCNs for which only a portion is subject to RS controls, the total number 

of licenses and dollar value for the complete ECCN are given. In most cases, the subcategories under these ECCNs that are not controlled for regional stability reasons are 

minimal. 

5. Effective Enforcement of Controls. The Secretary has determined that the 

United States has the ability to enforce these controls effectively. Image intensifier tubes, 

infrared focal plane arrays, certain software and technology for inertial navigation 

systems, gyroscopes, and accelerometers, and other items controlled for regional stability 

purposes, are almost all subject to multilateral controls for either national security or 

missile technology reasons. The multilateral nature of these controls aids in enforcement. 

The Department of Commerce effectively enforces RS controls by focusing on 

preventive enforcement, using regular outreach efforts to keep businesses informed of 

U.S. concerns, and gathering leads on activities of concern. Given the enhanced antiterrorism efforts of the U.S. Government, it is expected that industry will continue to 

support enforcement efforts. 

C. Consultation with Industry 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policy22 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

based export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on a regular basis and are not specific to this report. In particular, the 

Department holds quarterly consultations with the Sensors and Instrumentation Technical 

Advisory Committee (SITAC). The SITAC frequently addresses the RS controls on 

thermal imaging cameras and related items and technology. The comment period closed 

on October 5, 2007. A detailed review of all public comments received can be found in 

Appendix I. 

D. Consultation with Other Countries 

The United States imposes RS controls on items that either are controlled, or were at one 

time controlled, through the Wassenaar Arrangement. The Wassenaar Arrangement 

member countries hold extensive consultations, and certain member countries hold 

bilateral discussions regarding items on the Wassenaar control list. During 2007, the 

U.S. Government engaged in extensive consultations with its Wassenaar partners. 

Wassenaar participating states have agreed to incorporate the Wassenaar Dual-Use 

Control List into their own national export controls to prevent exports that could 

contribute to destabilizing buildups of conventional arms. 

E. Alternative Means 

The United States has undertaken a wide range of actions to support and encourage 

regional stability and has specifically encouraged efforts to limit the flow of arms and 

militarily useful goods and other special equipment to regions of conflict and tension. 

U.S. regional stability export controls remain an important element in U.S. efforts to 

enhance regional stability. The United States opposes the use of U.S. origin items to 

destabilize legitimate political regimes or fuel regional conflicts, notwithstanding the 

availability of such items from other sources. Accordingly, there are no alternative 

means to achieve this policy objective. 

F. Foreign Availability 

Some military vehicles and other military-type equipment that are controlled for regional 

stability purposes may be obtained from foreign sources, but there are overlapping 

multilateral national security (NS) controls on many RS-controlled items. These 

overlapping controls support the U.S. efforts to enhance regional stability by limiting 

foreign availability. In fact, most of the commodities and related software and 

technology controlled for regional stability purposes are also subject to multilateral 

controls for either national security or missile technology reasons under multilateral 

regimes. 

Manufacturers of imaging cameras controlled in ECCN 6A003 have voiced complaints to 

the Department of Commerce that there is considerable foreign availability of these items 

23 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 3 Regional Stability 

from Europe, Japan and China. The Department completed a comprehensive study of the 

industry’s condition, including the extent of foreign availability in 2006. It found that 

there is a growing commercial market for thermal imaging cameras, including the areas 

of astronomy, fire fighting, medical imaging, hunting, and wildlife observation, which 

represent increasing opportunities in the field. The study also found that U.S. exports of 

imaging and sensor products have grown steadily since 2001, but there is increasing 

competition from the European Union and Japan, resulting in a decline in U.S. market 

share. In addition, the study found that one category, uncooled infrared (thermal) 

imaging cameras, has seen a sharp decline in the value of exports from the United States 

where the global market for such products has steadily increased. These cameras are 

used in the commercial electronics, medical and automotive industries, and also for fire 

fighting, search and rescue and industrial safety. U.S. manufacturers cite overly 

restrictive U.S. export controls as a key reason for this decline, noting that foreign 

competitors face far less restrictive licensing requirements. The Department is exploring 

options with other agencies to address the issues raised in the study. 

24 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

25 

CHAPTER 4 

Anti-Terrorism Controls 

(Sections 742.8, 742.9, 742.10, 742.19, 746.2) 

Export Control Program Description and Licensing Policy

Pursuant to Section 6(j) of the Export Administration Act (the Act), the Secretary of State 

has designated five countries – Cuba, Iran, North Korea, Sudan, and Syria – as nations 

with governments that have repeatedly provided support for acts of international 

terrorism. Further, the United States maintains broader controls, in some cases 

comprehensive embargoes, on exports and reexports to Cuba, Iran, North Korea, Sudan, 

and Syria. The broader controls applicable to such countries are discussed in Chapter 5 

of this report. 

Since December 1993, the United States has applied Section 6(j) of the Act to license 

applications involving the export or reexport of five categories of dual-use items to 

certain sensitive end-users within Cuba, Iran, North Korea, Sudan, and Syria because 

these transactions meet the criteria set forth in Section 6(j)(1)(B) of the Act. Specifically, 

on December 28, 1993, the Acting Secretary of State determined that these items, if 

exported to military, police, or intelligence organizations, or to other sensitive end-users 

in a designated terrorist-supporting country, could make a significant contribution to that 

country’s military potential or could enhance its ability to support acts of international 

terrorism. As a result, any such export is subject to a 30-day congressional notification 

period prior to approval. The United States continues to control exports and reexports of 

such items to other end-users, as well as exports and reexports of other items not 

specifically included in these five categories, within designated state sponsors of 

terrorism for general foreign policy purposes under Section 6(a). Such transactions are 

also reviewed against the Section 6(j) standard on a case-by-case basis. These controls 

are identified in the Export Administration Regulations (EAR) as anti-terrorism (AT) 

controls. 

License Requirements and Licensing Policy

Pursuant to the 1993 determination of the Acting Secretary of State, and subsequent 

action consistent with such determination, certain items are controlled for anti-terrorism 

(AT) reasons pursuant to Section 6(j) of the Act, while others are controlled pursuant to 

Section 6(a). The Department of Commerce refers all license applications for items 

controlled for AT reasons to the Department of State for review. With respect to items 

controlled pursuant to Section 6(a) (including exports or reexports of CCL items to nonsensitive end-users), a determination is made regarding whether the requirements of 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

26 

Section 6(j) apply. If the Secretary of State determines that the particular export “could 

make a significant contribution to the military potential of the destination country, 

including its military logistics capability, or could enhance the ability of such country to 

support acts of international terrorism,” the Department of Commerce and the 

Department of State must notify the appropriate congressional committees 30 days before 

issuing a license, consistent with the provisions of Section 6(j) of the Act. Transactions 

not subject to such requirements are generally reviewed on a case-by-case basis. 

The following items are controlled pursuant to Section 6(j) to military, police, 

intelligence and other sensitive end-users in all designated terrorist-supporting countries: 

• All items on the CCL subject to national security controls; 

• All items on the CCL subject to chemical and biological weapons proliferation 

controls; 

• All items on the CCL subject to missile proliferation controls; 

• All items on the CCL subject to nuclear weapons proliferation controls; and 

• All military-related items on the CCL (items controlled by CCL entries ending 

with the number 18). 

Transactions involving exports or reexports of items controlled pursuant to Section 6(j) to 

military or other sensitive end-users in all five designated terrorist-supporting countries 

are subject to a general policy of denial. Pursuant to Section 6(a) of the Act, the 

Department of Commerce requires a license for the export or reexport of the items 

specified above to non-sensitive end-users in all five designated terrorist-supporting 

countries for AT reasons. Such exports or reexports are generally reviewed on a case-bycase basis. 

Pursuant to Section 6(a) of the Act, the Department of Commerce requires a license for 

the export of certain items on the CCL to all end-users in all five designated terroristsupporting countries, and for the reexport of certain items on the CCL to all five 

designated terrorist-supporting countries for AT reasons. Additionally, certain other 

items on the CCL require a license for export and/or reexport to one or more of the five 

designated terrorist-supporting countries for AT reasons. The applicable controls are 

contained in the relevant EAR sections applicable to each country. All export controls 

presently maintained for AT reasons pursuant to either Section 6(j) or Section 6(a) 

continue in force. 

Moreover, as described further in Chapter 5, the United States maintains comprehensive 

controls on exports and reexports to Cuba, Iran, Sudan, and Syria. As a result, the U.S. 

Government reviews license applications for exports and reexports of most items to these 

countries under a general policy of denial, with certain very limited exceptions. The 

Department of Commerce continues to maintain AT controls with respect to these 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

27 

countries, though such controls and the related licensing policies are secondary to the 

comprehensive embargoes in place. 

Analysis of Controls as Required by Section 6(f) of the Act

A. The Purpose of the Controls

Anti-terrorism controls are intended to prevent acts of terrorism and to distance the 

United States from nations that have repeatedly supported acts of international terrorism 

and from individuals and organizations that commit terrorist acts. The controls 

demonstrate U.S. resolve not to trade with nations or entities that fail to adhere to 

acceptable norms of international behavior. The policy provides the United States with 

the means to control U.S. goods or services that might contribute to the military potential 

of designated countries and to limit the availability of such goods for use in support of 

international terrorism. U.S. foreign policy objectives are also furthered by ensuring that 

items removed from multilateral regime lists continue to be controlled to designated 

terrorist-supporting countries. With respect to exports and reexports to Cuba, Iran, North 

Korea, Sudan, and Syria, anti-terrorism controls are maintained as part of broader U.S. 

sanctions discussed in Chapter 5. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including the availability of these AT-controlled items 

from other countries. The Secretary has further determined that the foreign policy 

purpose cannot be achieved through negotiations or other alternative means. Although 

widespread availability of comparable goods from foreign sources limits the effectiveness 

of these controls, the controls do restrict access by these countries and persons to U.S.-

origin commodities, technology, and software, and demonstrates U.S. determination to 

oppose and distance the United States from international terrorism. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and specifically with 

overall U.S. policy toward the designated terrorist-supporting countries. The Secretary 

has further determined that the extension of these controls will not have any significant 

adverse foreign policy consequences. These controls affirm the U.S. commitment to 

restrict the flow of items and other forms of material support to countries, individuals, or 

groups for terrorist purposes. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

28 

Most countries are generally supportive of U.S. efforts to fight terrorism and stop the 

proliferation of weapons of mass destruction in countries of concern. 

4. Economic Impact on United States Industry. The Secretary has determined that 

the adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, does not exceed 

the benefit to United States foreign policy objectives. The AT controls maintained on 

designated terrorist-supporting countries as a whole have had some impact on U.S. 

industry. The economic impact of broader controls maintained on Cuba, Iran, North 

Korea, Sudan, and Syria is described further in Chapter 5. On the whole, the impact on 

U.S. industry is modest while stopping state sponsorship of terrorism is a very high 

priority of the U.S. Government. 

5. Effective Enforcement of Controls. The Secretary has determined the United 

States has the ability to effectively enforce these controls. Because of the well-publicized 

involvement of these countries in acts of international terrorism, there is public 

knowledge of and support for U.S. controls, which facilitates enforcement. The large 

number of items exported in normal trade to other countries, including some aircraft 

items and consumer goods that have many producers and end-users around the world, 

creates innumerable procurement opportunities for brokers, agents, and front companies 

working for these countries. In addition, differences in export laws and standards of 

evidence for violations complicate law enforcement cooperation between countries. 

Nonetheless, the overriding foreign policy objective of maintaining these controls 

outweighs the difficulties of effective enforcement. The Department of Commerce views 

these controls as a key enforcement priority, and uses outreach efforts and other programs 

to keep businesses informed of concerns, gather leads on activities of concern, and 

conduct sentinel visits to verify end-use and end-users of U.S. commodities. The 

Department is moving to implement a strong program to address procurement by or for 

designated terrorist-supporting countries. This program includes enhanced agent 

training, development of a targeted outreach program to familiarize U.S. businesses with 

concerns, and close cooperation with lead agencies working on terrorism issues. 

A number of enforcement actions regarding non-compliance with these export controls 

occurred during Fiscal Year 2007. For example: 

Terrorist Dealings/Computer Exports to Libya and Syria: In October 2006, sentences 

were handed down in connection with prior convictions at trial of Infocom Corporation 

and its principals, the Elashi brothers, for dealing in the funds of a Specially Designated 

Terrorist, a high ranking official of the terrorist organization Hamas; and conspiracy to 

export computers and computer equipment to Libya and Syria.3

 Basman Elashi was 

 

3 Libya was formerly designated as a State Sponsor of Terrorism by the Secretary of State; this designation 

was rescinded in 2006. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

29 

sentenced to 80 months imprisonment on October 13, 2006; Ghassan Elashi was 

sentenced to 80 months imprisonment on October 12, 2006; and Infocom itself was 

sentenced to two years probation on October 11, 2006. Two other Infocom principals 

were previously sentenced in January 2006. Hazim Elashi was sentenced to 60 months 

imprisonment, two years probation, and deportation from the United States on January 

24, 2006; and Ihsan Elashi was sentenced to 72 months in prison and two years probation 

on January 25, 2006. At the time of his sentencing, Ihsan Elashi was serving a 48 month 

prison sentence following his 2002 conviction for violating a BIS Temporary Denial 

Order. OEE conducted this investigation as a member of the North Texas Joint 

Terrorism Task Force. 

Computer Equipment to Iraq: On July 18, 2007, Darrin Hanna and Dawn Hanna were 

indicted in the Eastern District of Michigan on counts of violating the International 

Emergency Economic Powers Act, conspiracy, money laundering, and false statements 

related to the exports of sensitive computer, communications, and GPS equipment to 

Iraq. At the time of these transactions, Iraq was designated as a terrorist-supporting 

country. The items alleged to have been exported without authorization were controlled 

under the EAR for anti-terrorism reasons. 

C. Consultation with Industry

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. In particular, the 

Department has engaged in an ongoing dialog with the Regulations and Policy Technical 

Advisory Committee (RPTAC) concerning the relevance of items controlled only for 

anti-terrorism (AT) reasons. The RPTAC has noted that many such items are widely 

available from foreign sources, and therefore, has questioned the effectiveness of the 

controls. The RPTAC also has noted that every country currently subject to AT controls 

is also subject comprehensive sanctions or embargo. The comment period closed on 

October 5, 2007. A detailed review of all public comments received can be found in 

Appendix I. 

D. Consultation with Other Countries

The United States continues to consult with a number of countries, both on a bilateral and 

a multilateral basis, on activities of designated terrorist-supporting countries. In general, 

most countries are supportive of U.S. anti-terrorism efforts but do not implement export 

control programs similar to that of the United States. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 4 Anti-Terrorism Controls 

30 

E. Alternative Means

The United States has taken a wide range of diplomatic, political, and security-related 

steps, in addition to economic measures such as export controls, to persuade certain 

countries to stop their support for terrorist activities. The methods that the United States 

uses against a country, terrorist organization, or individual vary and are dictated by the 

circumstances prevailing at any given time. In general, the United States believes that 

maintenance of AT controls is an appropriate method to demonstrate the obligation of 

each of the designated terrorist-supporting countries to act against terrorist elements 

within their jurisdiction or control. 

F. Foreign Availability

The foreign availability provision does not apply to items determined by the Secretary of 

State to require control under Section 6(j) of the Act4. Congress specifically excluded AT 

controls from foreign availability assessments otherwise required by the Act, due to the 

value of such controls in emphasizing the U.S. position on countries supporting 

international terrorism. However, the Department of Commerce has considered foreign 

availability of items controlled to designated terrorist-supporting countries under Section 

6(a). Although there are numerous foreign sources for commodities similar to those 

subject to control, the continued maintenance of sanctions by many other countries limits 

foreign availability for some destinations more than for others. In addition, the continued 

U.S. Government anti-terrorism controls serve foreign policy interests that override the 

impact of foreign availability.

 

4 Provisions pertaining to foreign availability do not apply to export controls in effect 

before July 12, 1985, under sections 6(i) (International Obligations), 6(j) (Countries 

Supporting International Terrorism), and 6(n) (Crime Control Instruments). See the 

Export Administration Amendments Act of 1985, Public Law 99-64, section 108(g)(2), 

Stat. 120, 134-35. Moreover, sections 6(i), 6(j), and 6(n) require that controls be 

implemented under certain conditions without consideration of foreign availability.

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

31 

CHAPTER 5 

Embargoes and Other Special Controls 

(Sections 744.12, 744.13, 744.14, 744.18, 744.20, 744.22, 746.2, 746.3, 

746.4, 746.7, and General Orders No. 2 & No. 3 of Part 736) 

Export Control Program Description

This chapter discusses the Department of Commerce’s implementation of comprehensive 

and partial embargoes and other special controls maintained by the U.S. Government 

pursuant to the Export Administration Regulations (EAR), either unilaterally or to 

implement United Nations Security Council (UNSC) Resolutions. Specifically, the U.S. 

Government maintains comprehensive economic embargoes on Cuba, Iran, Sudan, Syria, 

and certain designated terrorist persons or groups. The U.S. Government also maintains 

certain special export control programs, including programs relating to Rwanda, Iraq, and 

North Korea, consistent with international obligations. Finally, the U.S. Government 

maintains special controls on certain persons or entities, including those engaged in the 

proliferation of weapons of mass destruction. 

Summary of 2007 Changes: 

North Korea

On January 26, 2007, as a result of North Korea’s test launch of ballistic missiles in July 

2006, and testing of a nuclear device in October 2006, and consistent with United Nations 

Security Council Resolutions (UNSCRs) 1695 and 1718, the Department published in the 

Federal Register an amendment to the EAR implementing changes in export controls 

with respect to North Korea (72 FR 3722). This amendment implemented license 

requirements for the export and reexport of all items subject to EAR to North Korea, with 

limited exceptions. 

Mayrow General Trading and Related Entities 

On June 8, 2007, the Department published in the Federal Register an amendment to 

General Order No. 3 imposing license requirements on the export and reexport of all 

items subject to the EAR to 16 entities affiliated with or conducting business with 

Mayrow General Trading, a United Arab Emirates (UAE) company, or who have 

acquired electronic components and devices capable of being used to construct 

improvised explosive devices (IEDs) which would be used against U.S. and Coalition 

Forces in Iraq and Afghanistan (72 FR 31716).

Iran 

On July 12, 2007, the Department published in the Federal Register an amendment to the 

EAR to add five Iranian entities to the Entity List (72 FR 38008). The Department 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

32 

determined that three of these entities were involved in nuclear-related proliferation 

activities described in Section 744.2 of the EAR and two entities were involved in 

prohibited activities related to rocket systems and unmanned aerial vehicles described in 

Section 744.3 of the EAR. All five entities are also subject to sanctions maintained by 

the Department of the Treasury pursuant to Executive Order 13382 and United Nations 

Security Council Resolution 1737. 

Burma 

On October 24, 2007, the Department published in the Federal Register an amendment to 

the EAR imposing licensing requirements on items subject to the EAR for certain persons 

designated in or pursuant to Executive Order 13448 (72 FR 60248). The President issued 

Executive Order 13448 in response to Burma’s continued repression of democratic 

opposition. The amendment also moved Burma from Country Group B to Country 

Group D:1 and from Computer Tier 1 to Tier 3.

Licensing Requirements and Licensing Policy 

Burma 

In response to the Government of Burma’s repression of the democratic opposition in that 

country, the United States enacted an arms embargo against Burma in 1993; a ban on new 

investments in Burma in 1997 (Executive Order 13047); and a ban on the import of 

goods from Burma, the export of financial services to Burma, and the blocking of certain 

Burmese property in 2003 (Executive Order 13310). Given continuing Government 

repression, the President issued Executive Order (E.O.) 13448 on October 18, 2007, 

blocking additional property and prohibiting certain transactions related to Burma. E.O. 

13448 designated certain persons in Burma as subject to sanctions administered by the 

Department of the Treasury, Office of Foreign Assets Control (OFAC). Consistent with 

E.O. 13448 and with E.O. 13310, the Department amended the EAR to impose a license 

requirement for exports, reexports or transfers of items subject to the EAR to persons 

designated in or pursuant to E.O. 13448 or E.O. 13310. This amendment created a new 

§744.22 to set forth this new license requirement. Further, in part 740 of the EAR 

(License Exceptions), this rule moved Burma from Computer Tier 1 to Computer Tier 3, 

restricting access to high-performance computers and related technology and software 

under License Exception APP (Section 740.7). In Supplement No. 1 to part 740 (Country 

Groups), this amendment moved Burma from Country Group B to Country Group D:1, 

which further limits the number of license exceptions available for exports to Burma. 

Burma will also remain in Country Group D:3. 

Cuba 

The Department of Commerce requires a license for export or reexport to Cuba of 

virtually all commodities, technology, and software subject to the EAR, with a few 

narrow exceptions including: 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

33 

• certain exports to meet basic human needs; 

• some types of personal baggage; 

• certain foreign-origin items in transit through the United States; 

• shipments for U.S. Government personnel and agencies; and 

• gift parcels including medicine, medical supplies and devices, receive-only radio 

equipment, and batteries for such equipment and food (including vitamins), provided 

that the value of non-food items does not exceed $200.5

The Department generally denies license applications for exports or reexports to Cuba. 

However, the Department considers applications for the following on a case-by-case 

basis: 

• exports from foreign countries of non-strategic, foreign-made products containing 

20 percent or less U.S.-origin parts, components, or materials, provided the exporter 

is not a U.S.-owned or controlled foreign firm in a third country; 

• exports of telecommunications equipment, to the extent permitted as part of a 

telecommunications project approved by the Federal Communications Commission, 

necessary to deliver a signal to an international telecommunications gateway in Cuba; 

• exports of business and office equipment destined to human rights organizations or to 

individuals and non-governmental organizations that promote independent activity; 

• certain commodities and software for U.S. news bureaus in Cuba; 

• exports of certain agricultural items not eligible for License Exception Agricultural 

Commodities (AGR); and 

• certain vessels and aircraft on temporary sojourn to Cuba. 

The Department reviews applications for exports of donated and commercially supplied 

medicine or medical devices to Cuba on a case-by-case basis, pursuant to the provisions 

of Section 6004 of the Cuban Democracy Act of 1992. The United States does not 

restrict exports of these items, except in the following cases: 

• to the extent Section 5(m) of the Act or Section 203(b)(2) of the International 

Emergency Economic Powers Act (IEEPA) would permit such restrictions; 

• when there is a reasonable likelihood the item to be exported will be used for 

purposes of torture or other human rights abuses; 

• when there is a reasonable likelihood the item to be exported will be reexported; 

• when the item to be exported could be used in the production of any biotechnological 

product; or 

• when the U.S. Government determines it would be unable to verify, by on-site 

inspection and other appropriate means, that the item to be exported will be only for 

 

5

 An individual donor does not require a license to send a gift parcel addressed to an individual donee. A 

gift parcel consolidator who exports multiple parcels in a single shipment for delivery to Cuba does require 

a license. (See note to Section 740.12 (a) of the EAR.) 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

34 

The Department authorizes the use of License Exception Agricultural Commodities 

(AGR) for U.S. exports and certain reexports of agricultural commodities to Cuba. 

Section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 

(Title IX of Pub. L. 106-387), as amended (TSRA), requires the expedited review of 

proposed exports of agricultural commodities to Cuba. Under License Exception AGR, 

an exporter must submit prior notification of a proposed transaction to the Department of 

Commerce. The exporter may proceed with the shipment when the Department confirms 

that no reviewing agency has raised an objection (generally within 12 business days), 

provided the transaction meets all of the other requirements of the license exception. 

This expedited review includes the screening of the ultimate recipient of the commodities 

to ensure that the ultimate recipient is not involved in promoting international terrorism. 

Exports of medicines and medical devices to Cuba are not eligible for License Exception 

AGR and continue to be subject to the license application and review requirements of 

Section 6004 of the Cuban Democracy Act of 1992. 

Iran

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers 

the U.S. Government’s comprehensive trade and investment embargo against Iran. No 

person may export or reexport items subject to both the EAR and OFAC’s Iranian 

Transactions Regulations without prior OFAC authorization. 

The U.S. Government has a general policy of denial for all items controlled for chemical, 

biological, missile, and nuclear proliferation reasons; military-related items controlled for 

national security or regional stability reasons (ECCNs ending in the number 18); and all 

other items controlled for national security or foreign policy reasons for all end-users in 

Iran.6

 Pursuant to Executive Order 12959 of May 6, 1995, Executive Order 13059 of 

August 19, 1997, and the Iran-Iraq Arms Non-Proliferation Act of 1992 (as amended), 

the Department of the Treasury maintains comprehensive trade restrictions on exports 

and reexports of Commerce Control List (CCL) items to Iran and is responsible for 

licensing: (1) exports from the United States to Iran; (2) exports and reexports by U.S. 

persons to Iran, including agricultural and medical items classified as EAR99 (items not 

on the CCL but subject to the EAR) under the provisions of TSRA; and (3) reexports of 

CCL items by any person to Iran. The Department of Commerce has licensing 

responsibility for reexports of EAR99 items to Iran by non-U.S. persons for instances 

where there is a proliferation or terrorism concern, and for the deemed export of 

technology subject to the EAR to Iranian nationals in the United States. To reinforce 

 

6 The general policy of denial stated in the EAR is superseded by a policy of denial 

pursuant to the Iran-Iraq Arms Nonproliferation Act of 1992. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

35 

controls administered by the Department of the Treasury, it is also a violation of the EAR 

to export or reexport to Iran any item that is subject to the Treasury Department’s 

regulations, and also subject to the EAR, without Treasury’s authorization. 

On July 12, 2007, the Department published in the Federal Register an amendment to the 

EAR to add five Iranian entities to the Entity List (72 FR 38008). The Department 

determined that three of these entities were involved in nuclear-related proliferation 

activities described in Section 744.2 of the EAR. These entities are the Atomic Energy 

Organization of Iran, Kala Electric Company, and Mesbah Energy Company. Two 

additional entities – Shahid Bakeri Industrial Group and Shahid Hemmat Industrial 

Group – were determined to be involved in prohibited rocket systems and unmanned 

aerial vehicle activities described in Section 744.3 of the EAR. All five entities are also 

subject to sanctions maintained by the Department of the Treasury pursuant to Executive 

Order 13382 and United Nations Security Council Resolution 1737. A license is required 

for the export or reexport of all items subject to the EAR to these entities. 

Iraq

Pursuant to controls related to United Nations Security Council Resolution 1483, which 

retains restrictions on the sale or supply to Iraq of arms and related material, the 

Department of Commerce requires a license for the export or reexport to Iraq, or transfer 

within Iraq, of: 

• any item that is destined for use in Iraqi civil nuclear or military nuclear activity 

(except for use of isotopes for medical, industrial, or agricultural purposes); 

• machine tools controlled for national security (NS) or nuclear non-proliferation 

(NP) reasons; and 

• any item controlled for crime control (CC) or United Nations (UN) reasons, or 

any item controlled under an ECCN ending in the number “018,” that would make 

a material contribution to the production, research, design, development, support, 

maintenance, or manufacture of Iraqi weapons of mass destruction, ballistic 

missiles or arms and related materiel. 

The Department reviews license applications for these items under a general policy of 

denial. 

In addition, the Department requires a license for the export, reexport, or transfer of items 

subject to the EAR if the exporter knows, has reason to know, or is informed by the 

Department that the item will be, or is intended to be, used in Iraq for a “military enduse” or a “military end-user,” as defined in Section 746.3 of the EAR. As defined 

specifically for Iraq, a military end-user is any person or entity whose actions or 

functions are intended to support “military end-uses” and who is not recognized as a 

legitimate military organization by the U.S. Government. “Military end-use” is the 

incorporation of an item into a military item described on the U.S. Munitions List 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

36 

(USML) (22 CFR part 121, International Traffic in Arms Regulations), or the Wassenaar 

Arrangement Munitions List (WAML); or use, development, or deployment of military 

items described on the USML or the WAML. The Department reviews license 

applications destined to such end-users under a policy of denial. 

Unless already authorized by the Department of the Treasury, the Department of 

Commerce requires a license for exports, reexports, or transfers of any item subject to the 

EAR to persons listed in the Annex to Executive Order 13315, as amended (“Blocking 

Property of the Former Iraqi Regime, Its Senior Officials and Their Family Members, and 

Taking Certain Other Actions”), as well as persons subsequently designated by the 

Secretary of the Treasury pursuant to that executive order. License applications for such 

transactions are reviewed under a general policy of denial by the Department. 

Mayrow General Trading and Related Entities 

Pursuant to General Order No. 3, a license is required for the export and reexport of all 

items subject to the EAR destined to Mayrow General Trading, a United Arab Emirates 

(UAE) company, or certain affiliated companies identified in General Order No. 3. The 

Department published the General Order on the basis of information, which gave the U.S. 

Government reason to believe that Mayrow and its affiliated companies had acquired 

electronic components and devices capable of being used to construct improvised 

explosive devices (IEDs) to be used against U.S. and Coalition Forces in Iraq and 

Afghanistan. 

On June 7, 2007, the Department published in the Federal Register an amendment to 

General Order No. 3 imposing license requirements on the export and reexport of all 

items subject to the EAR to 16 additional entities affiliated with or conducting business 

with Mayrow General Trading or who had acquired electronic components and devices 

capable of being used to construct improvised explosive devices (IEDs) to be used 

against U.S. and Coalition Forces in Iraq and Afghanistan (72 FR 31716). 

North Korea

On July 4, 2006, in defiance of international calls for restraint, North Korea test-launched 

a series of ballistic missiles. In response to these actions, on July 15, 2006, the United 

Nations Security Council adopted Security Council Resolution 1695 (UNSCR 1695) 

demanding that North Korea suspend all ballistic missile-related activity and reinstate a 

moratorium on missile launches. UNSCR 1695 requires all United Nations Member 

States to exercise vigilance and prevent, in accordance with their national legal 

authorities and legislation consistent with international law, (1) the transfer of missile and 

missile-related items, materials, goods and technology to North Korea’s missile or 

weapons of mass destruction programs; (2) the procurement of such items and technology 

from North Korea; and (3) the transfer of financial resources in relation to such programs. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

37 

On October 9, 2006, North Korea tested a nuclear device. In response, on October 14, 

2006, the United Nations Security Council adopted UNSCR 1718 condemning the 

nuclear test and expressing grave concern over the threat the test constituted to the Treaty 

on Non-Proliferation of Nuclear Weapons, to regional peace and stability, and to 

international efforts to strengthen global non-proliferation. UNSCR 1718 requires all UN 

Member States to prevent the supply, sale, or transfer of: (1) certain arms and related 

materiel, including spare parts; (2) items listed in UN documents S/2006/814, 

S/2006/815, and S/2006/853, as well as other items, as determined by the UN Security 

Council or the 1718 Sanctions Committee, that could contribute to North Korea’s 

nuclear, ballistic missile, and other weapons of mass destruction-related programs; and 

(3) luxury goods. UNSCR 1718 decided that North Korea must, in a verifiable and 

irreversible manner, abandon all nuclear weapons, existing nuclear programs, and all 

other existing weapons of mass destruction and ballistic missile programs, and must 

suspend all ballistic missile activities. The Resolution also demanded that North Korea 

return to the Treaty on the Non-Proliferation of Nuclear Weapons and International 

Atomic Energy Agency (IAEA) safeguards.

Consistent with UNSCRs 1695 and 1718, on January 26, 2007, the Department of 

Commerce published in the Federal Register an amendment to the EAR implementing 

changes in U.S. export controls with respect to North Korea (72 FR 3722). This 

amendment implemented license requirements for exports and reexports of all items 

subject to the EAR to North Korea, with the exception of food and EAR99 medicines 

(i.e., medicines subject to the EAR but not controlled on the Commerce Control List 

(CCL)), with a few narrow exceptions including: 

• gift parcels not including luxury items; 

• some types of personal baggage; 

• items for personal or official use by personnel and agencies of the U.S. Government, 

the International Atomic Energy Agency, or the European Atomic Energy 

Community 

The Department also revised its license review policy for certain classes of exports and 

reexports to North Korea. Items requiring a license are subject to case-by-case review, 

except as follows: 

• luxury goods (e.g., luxury automobiles; yachts; jewelry; designer clothing; luxury 

watches; electronic entertainment software and equipment; recreational sports 

equipment; tobacco; alcoholic beverages; musical instruments; art; antiques and 

collectibles) are subject to a general policy of denial; 

• arms and related material are subject to a general policy of denial; 

• most items listed on the Commerce Control List (CCL) are subject to a general policy 

of denial; and 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

38 

• humanitarian items (e.g., blankets, basic footwear, heating oil, and other items 

meeting subsistence needs) intended for the benefit of the North Korean people are 

subject to a general policy of approval. 

Persons Sanctioned for Proliferation-related Activities

Pursuant to Section 744.20 of the EAR, and the Iran, North Korea, and Syria 

Nonproliferation Act, the Department prohibits the export and reexport of items requiring 

a license to certain entities determined to have transferred equipment and/or technology 

controlled under the multilateral export control lists (the Missile Technology Control 

Regime, the Australia Group, the Chemical Weapons Convention, the Nuclear Suppliers’ 

Group, and the Wassenaar Arrangement) or otherwise having the potential to make a 

material contribution to the development of weapons of mass destruction (WMD) or 

cruise or ballistic missile systems to inappropriate end-users in Iran, North Korea, and 

Syria. The latter category of items includes (a) items of the same kind as those on 

multilateral lists but falling below the control list parameters, when it is determined that 

such items have the potential of making a material contribution to WMD or cruise or 

ballistic missile systems, (b) other items with the potential of making such a material 

contribution, when added through case-by-case decisions, and (c) items on the U.S. 

national control lists for WMD or missile reasons that are not on the multilateral lists. 

Sudan 

Pursuant to Executive Orders 13067 (November 3, 1997) and 13412 (October 13, 2006), 

the Department of the Treasury maintains trade restrictions on exports and reexports to 

Sudan. The export and reexport of items controlled on the CCL to Sudan requires a 

license from both the Department of Commerce and the Department of the Treasury. 

License applications may be submitted to both agencies concurrently. The Department of 

Commerce applies a general policy of denial for the export and reexport of all items 

controlled for chemical, biological, missile, and nuclear proliferation reasons, militaryrelated items controlled for national security or regional stability reasons (CCL entries 

ending in the number 018), and certain items controlled for national security or foreign 

policy reasons, such as aircraft, cryptologic items, and explosive device detectors, for all 

end-users in Sudan. Other items controlled to Sudan for national security or foreign 

policy reasons are subject to a general policy of denial for military end-users or end-uses 

and are reviewed on a case-by-case basis for non-military end-users or end-uses. 

The Department of the Treasury is solely responsible for licensing the export of 

agricultural and medical items not listed on the CCL to Sudan under the provisions of the 

Trade Sanctions Reform and Export Enhancement Act (TSRA). The Department of the 

Treasury’s Office of Foreign Assets Control (OFAC) also continues to require a license 

for the export of many EAR99 items to Sudan; however, Executive Order 13412 eased 

the licensing requirements with respect to exports to Southern Sudan. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

39 

Syria

On May 11, 2004, the President issued Executive Order 13338 to implement Sections 

5(a)(1) and 5(a)(2)(A) of the Syrian Accountability and Lebanese Sovereignty 

Restoration Act (SAA). In compliance with the President’s action, the Department 

revised its license requirements and licensing policy for Syria to restrict all exports or 

reexports to Syria of items subject to the EAR, as specified in General Order No. 2 to 

Supplement No. 1 to Part 736 of the EAR, which was published in the Federal Register

on May 14, 2004 (69 FR 26766). 

The Department of Commerce requires a license for export or reexport to Syria of all 

commodities, technology, and software subject to the EAR, except: 

• personal baggage for individuals leaving the United States; 

• items for the use of the news media under certain conditions; 

• exports for U.S. Government personnel and agencies; 

• certain operation technology and software, sales technology, and software 

updates; 

• temporary sojourn of some civil aircraft reexported to Syria; 

• food; and 

• some medicine. 

The Department generally denies license applications for exports or reexports to Syria. 

However, the Department considers applications for the following on a case-by-case 

basis: 

• items in support of U.S. Government activities; 

• medicine on the CCL; 

• medical devices; 

• parts and components intended to ensure the safety of civil aviation and safe 

operation of commercial passenger aircraft; 

• aircraft chartered by the Syrian Government for the transport of Syrian 

Government officials on official Syrian Government business; 

• telecommunications equipment and associated computers, software, and 

technology; and 

• items in support of United Nations operations in Syria. 

Designated Terrorist Persons and Groups

The Department of Commerce requires a license for the export from the United States or 

by U.S. persons of all items subject to the EAR to Specially Designated Global Terrorists 

(SDGTs), Specially Designated Terrorists (SDTs), and Foreign Terrorist Organizations 

(FTOs). The Department also requires a license for the reexport by non-U.S. persons of 

items on the CCL to such SDGTs, SDTs, or FTOs and a general policy of denial applies 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

40 

to all applications. SDGTs, SDTs, and FTOs are identified on a list of designated persons 

maintained by the Department of the Treasury in Appendix A to 31 CFR Chapter V. 

United Nations Security Council Arms Embargoes 

Rwanda 

On May 17, 1994, the United Nations Security Council (UNSC) imposed an arms 

embargo on Rwanda. In 1995, the UNSC suspended the application of the embargo on 

the Government of Rwanda (GOR) and on September 1, 1996, pursuant to UNSC 

Resolution 1011, the UNSC terminated the embargo in regard to the GOR. However, the 

United Nations continues to prohibit the sale or supply of such arms and arms-related 

materiel to all persons in Rwanda, including non-governmental forces, other than the 

GOR. On July 30, 2003, the Department of State implemented a partial lifting of the 

U.S. arms embargo for items subject to the International Traffic in Arms Regulations 

(ITAR) and destined for the Government of Rwanda. Arms and related materiel subject 

to Department of Commerce licensing jurisdiction remain under embargo to all end-users 

in Rwanda. 

The U.S. Government continues to require a license for foreign policy purposes for the 

export or reexport by a U.S. person to any non-government end-user in Rwanda of all 

ITAR-controlled arms and arms-related materiel of all types, regardless of origin, 

including weapons and ammunition, military vehicles and equipment, paramilitary police 

equipment, and spare parts for these items. The embargo applies to all end-users for arms 

and arms-related material controlled in the EAR. The U.S. Government has a general 

policy of denial for export or reexport of ITAR-controlled items to non-government endusers and EAR-controlled items to all end-users in Rwanda. The U.S. Government also 

requires a license for the use of any U.S. aircraft or vessel to supply or transport any such 

items to Rwanda. The Department reviews proposed exports or reexports to the 

Government of Rwanda on a case-by-case basis. 

Other Countries 

The UNSC also maintains embargoes on the export of certain arms and related materiel 

to several other countries, geographic regions, or entities within certain countries. Such 

countries include the Democratic Republic of Congo, Ivory Coast (known formally as 

Côte d'Ivoire), Lebanon, Liberia, Sierra Leone, and Somalia. The Department expects to 

implement these arms embargoes for purposes of the EAR through a regulation to be 

published in the Federal Register. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

41 

Analysis of Controls as Required by Section 6(f) of the Act 

A. The Purpose of the Controls

Burma 

The purpose of the controls, some of which have been in place since 1993, is to restrict 

exports of items that would aid the Government of Burma’s continued repression of the 

democratic opposition in that country, and to address U.S. foreign policy concerns with 

the Burmese regime. 

Cuba

The United States imposed an embargo four decades ago because Cuban Government 

actions posed a serious threat to the stability of the Western Hemisphere and the Cuban 

Government expropriated property of U.S. citizens without compensation. In March 

1982, as a result of Cuba’s support for insurgent groups that engaged in terrorism, the 

Secretary of State designated it as a state sponsor of terrorism under Section 6(j) of the 

Act. The purpose of the controls is to restrict exports that would allow Cuba to act as a 

destabilizing force and/or to support terrorism. The controls demonstrate the United 

States’ resolve to maintain stability in the region and to actively work against the threat 

of terrorism and those who support it. At the same time, U.S. support for the export of 

food, “gift packs,” and other humanitarian items, such as medicines and medical devices, 

ensures that the Cuban population is not deprived of basic human needs. 

Iran

The purpose of the controls is to restrict exports of items that would be useful in 

enhancing Iran’s military terrorist-supporting capabilities and to address other U.S. 

foreign policy concerns, including nonproliferation, human rights, and regional stability. 

In the Department of State’s Country Reports on Terrorism 2006, dated April 2007, Iran 

is identified as the most active state sponsor of terrorism. Iran maintains a high-profile 

role in encouraging anti-Israel activity, and continues to be unwilling to bring to justice 

detained al-Qa’ida figures. The U.S. Government also has grave concerns regarding 

Iran’s pursuit of a nuclear weapons capability and incomplete, poor, and intermittent 

cooperation with the International Atomic Energy Agency (IAEA). The United States 

led an effort at the United Nations Security Council (UNSC) to adopt two UNSC 

Resolutions (1737 and 1747) that require all UN Member States to restrict trade in certain 

nuclear and missile items useful to proliferation sensitive nuclear activities (defined as 

uranium enrichment-related, reprocessing, and heavy water-related activities) and the 

development of a nuclear weapon delivery system to Iran. U.S. export controls remain in 

place due to both our terrorism concerns and Iran’s pursuit of a nuclear weapons 

capability. By restricting the export of items with military use, the controls demonstrate 

the resolve of the United States not to provide any direct or indirect military support for 

Iran and to support other U.S. foreign policy objectives. The United States’ support for 

exports and reexports of food items, medical supplies, and medical equipment is designed 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

42 

to ensure that U.S. export controls on Iran do not prevent the Iranian population from 

receiving what it needs for humanitarian purposes. 

Iraq

The purpose of the controls is to restrict exports to insurgents within Iraq and other 

inappropriate military end-users in Iraq, including the former Iraqi leadership, thereby 

limiting their ability to enhance or expand their activities.

Mayrow General Trading and Related Entities 

The purpose of the controls is to demonstrate the United States’ concern over the 

diversion of goods for use against U.S. and Coalition Forces, and to demonstrate the 

United States’ resolve to act against entities diverting goods for any type of proliferation 

or munitions-related end-use. 

North Korea 

The purpose of the controls is to restrict exports and reexports to North Korea to comply 

with the United States’ obligations as a member of the United Nations, and to 

demonstrate the United States’ concern over North Korea’s development, testing and 

proliferation of nuclear and missile weapons of mass destruction. 

Persons Sanctioned for Proliferation-related Activities 

The purpose of the controls is to restrict exports to individuals and entities engaged in 

proliferation-related activities. The individuals and entities designated under these 

controls have diverted items that may be used in weapons of mass destructions programs 

in violation of U.S. export control laws. These controls demonstrate the United States’ 

opposition to such transfers as well as its resolve to actively work against such 

diversions. 

Sudan

The U.S. embargo and export controls remain in place against Sudan to restrict access to 

items that could make a significant contribution to Sudan’s military capability. Although 

the Government of Sudan has cooperated with U.S. counterterrorism efforts, the United 

States will not fully normalize relations with Sudan until the situation in Darfur is 

satisfactorily addressed. 

On January 9, 2005, a Comprehensive Peace Agreement was signed between the 

Government of Sudan and the Sudan People’s Liberation Movement/Army (SPLM/A). 

The Agreement provided for a new constitution and new arrangements for power sharing, 

wealth sharing, and security, on the national level. On July 9, 2005, the Government of 

National Unity, which includes participants from both the Government of Sudan and the 

SPLM/A, was installed and on July 6, a new constitution was ratified. However, the 

humanitarian crisis in Darfur remains an important focus of U.S. policy efforts. Although 

a peace accord was signed between the Government of Sudan and one major rebel group, 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

43 

the Sudan Liberation Army (SLA) on May 4, 2006, attacks on non-combatants in Darfur 

have increased while access and security for humanitarian aid workers has declined. 

Syria 

The Syrian Government continues to provide political and material support to a number 

of Palestinian groups that have committed terrorist acts, but contends that the groups’ 

offices in Syria only undertake political and informational activities. Syria also provides 

political and material support to Hizballah in Lebanon, including allowing Iran to resupply that terrorist group through Syrian territory. Additionally, the U.S. Government 

continues to have concerns about Syria’s interference in Lebanon and its provision of a 

safe haven for terrorist organizations as well as its nuclear, missile, and 

chemical/biological programs. 

U.S. export controls reflect U.S. opposition to these activities. The controls also promote 

other U.S. foreign policy interests, including human rights and regional stability. 

Designated Terrorist Persons and Groups

The purpose of controls on designated terrorist persons and groups is to restrict exports of 

items that would be useful in enhancing the capability of SDGTs, SDTs, and FTOs to 

undertake terrorist acts and to further the general policy of the United States to prevent 

supporters of terrorism and terrorist elements from acquiring technology that might 

enhance terrorist capabilities. The controls enable the Department of Commerce to use 

its licensing and enforcement resources to support U.S. counterterrorism efforts by 

monitoring and investigating unlicensed exports, reexports, and diversions of items 

subject to the EAR to parties designated as terrorists by the U.S. Government. 

United Nations Security Council Arms Embargoes 

The controls on arms-related items to the Democratic Republic of Congo, Côte d’Ivoire, 

Liberia, Lebanon, Rwanda, Sierra Leone, and Somalia remain in place to prevent any 

U.S. contribution to potential conflict within these countries and to conform to United 

Nations-mandated sanctions. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving Intended Foreign Policy Purpose. The Secretary has 

determined that these controls are likely to achieve the intended foreign policy purpose, 

in light of other factors, including foreign availability from other countries. He has 

further determined that the foreign policy purpose cannot be achieved through 

negotiations or other alternative means. For each of the controls described in this 

chapter, the Secretary has determined that such restrictions have denied the targeted 

persons and nations certain trade relations with the United States and in some cases other 

nations. The controls described in this chapter seek to have the targeted persons or 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

44 

governments modify their actions. In addition, the applicable controls may serve to 

reduce the potential for conflict. 

Burma 

The Secretary has determined that the imposition of foreign policy controls will 

demonstrate the U.S. opposition to the Government of Burma’s repressive measures 

directed against the democratic opposition in that country and deny it resources to sustain 

and/or enhance such measures. 

Cuba 

The Secretary has determined that the embargo will help to bring about a peaceful 

transition toward democracy and a free market economy in Cuba while providing for the 

basic human needs of the Cuban people. 

Iran

The Secretary has determined that foreign policy controls will restrict Iran’s access to 

specified U.S.-origin items that could contribute to Iranian support of terrorism and 

instigation of regional threats to U.S. interests. 

Iraq

The Secretary has determined that foreign policy controls will thwart any resumption of 

WMD activities fostered by the former Iraqi regime and restrict the ability of terrorists 

and insurgent groups to obtain and use U.S.-origin items to attack U.S. and Coalition 

forces in Iraq and destabilize the current Government of Iraq. 

Mayrow General Trading and Related Entities 

The Secretary has determined that foreign policy controls will restrict the availability of 

components and devices requisite for the construction of improvised explosive devices 

(IEDs) that could be used in attacks or against U.S. and Coalition Forces in Iraq and/or 

Afghanistan. 

North Korea 

The Secretary has determined that the foreign policy controls will meet U.S obligations 

under relevant UN Security Council resolutions and impede North Korea’s development, 

testing, and proliferation of nuclear and other weapons of mass destruction and ballistic 

missiles. 

Persons Sanctioned for Proliferation-related Activities 

The Secretary has determined that foreign policy controls will thwart the access that these 

persons have had to U.S.-origin items that could advance efforts by state actors and 

terrorist groups to acquire WMD. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

45 

Sudan 

The Secretary has determined that foreign policy controls will restrict the Government of 

Sudan’s ability to obtain and use U.S.-origin items in support of military activities in 

Darfur. The controls are also likely to impede terrorist activities in Sudan and support 

international efforts to end the humanitarian crisis in Darfur. 

Syria 

The Secretary has determined that foreign policy controls will contribute to the 

Government of Syria ending its support of terrorist groups and interference in Lebanon. 

Designated Terrorist Persons and Groups

The Secretary has determined that foreign policy controls will thwart the access that these 

persons and groups have had to U.S.-origin items that could support terrorist operations. 

United Nations Security Council Arms Embargoes

The Secretary has determined that embargoes on exports of arms-related items to the 

Democratic Republic of Congo, Côte d’Ivoire, Liberia, Lebanon, Rwanda, Sierra Leone, 

and Somalia will meet U.S obligations under relevant UN Security Council resolutions 

and restrict access to U.S.-origin items that could contribute to internal conflict and 

regional instability. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives, and that the extension 

of these controls will not have any significant adverse foreign policy consequences. The 

controls complement U.S. foreign policy and other aspects of U.S. relations with these 

persons and countries. They encourage these persons and governments to modify their 

actions with the goal of improving conditions in their region. These controls are 

consistent with U.S. foreign policy goals of promoting peace and stability, and preventing 

weapons proliferation and human rights abuses. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

Notwithstanding the fact that most countries have not imposed embargoes as 

comprehensive as those of the United States, and that some countries have challenged 

certain U.S. controls as unwarranted extraterritorial regulations, the overriding foreign 

policy objective of maintaining these controls outweighs negative foreign reactions. 

Opposition to U.S. foreign policy-based controls by many of our major trading partners, 

including some close allies, continues to be a point of contention. This reaction has led 

some foreign firms to design out U.S. components or to cite the lack of their own national 

sanctions as a marketing tool to secure business contracts that might have gone to U.S. 

companies. In some instances, foreign governments have instructed foreign firms to 

ignore U.S. reexport controls. However, in certain areas, such as the nuclear threat posed 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

46 

by Iran and North Korea and the genocide in the Darfur region of Sudan, the United 

States has received broader international support for its sanctions policies from other 

countries. 

 

Burma 

Other countries share U.S. concerns regarding the Government of Burma’s repression of 

the democratic opposition in that country. Several Western countries have imposed their 

own economic sanctions and pursued a policy of supporting democratic activists within 

Burma. The United States continues to work within the UN Security Council and with 

like-minded countries to maximize international support for the Burmese people’s efforts 

to restore democracy and respect for human rights in Burma. 

Cuba

Although most countries recognize the right of the United States to determine its own 

foreign policy and security concerns and share U.S. concerns regarding the Cuban 

regime, many countries, particularly Canada, Mexico, and the members of the European 

Union, opposed the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 

(Helms-Burton) and continue to oppose unilateral U.S. controls on Cuba. Many nations, 

however, have joined the United States in promoting political freedom, as a result of the 

Cuban Government’s jailing of pro-democracy advocates. 

Iran

Other countries share U.S. concerns regarding Iran’s support of terrorism, human rights 

abuses, and attempts to acquire WMD. This is especially the case in the nuclear context, 

where concerns with Iran’s intentions vis-à-vis its nuclear program have led to the 

unanimous adoption of two UN Security Council resolutions imposing Chapter VII 

sanctions on Iran. The member states of the G-8, the European Union, the members of 

the Nuclear Suppliers Group, and other multilateral bodies have joined the United States 

in expressing their concern over Iran’s pursuit of a nuclear weapons capability and have 

called on Iran to cooperate fully and transparently with the International Atomic Energy 

Agency (IAEA). In general, however, U.S. controls on commercial goods to Iran are 

more stringent than most other countries’ controls. 

Iraq

The United States continues to impose an arms embargo on military end-users and enduses that are not affiliated with the Coalition Forces or the Iraqi Government in Iraq in 

parallel with its obligations as a member of the United Nations. Many other member 

states also comply with these obligations and impose an arms embargo on Iraq. Other 

nations also share U.S. concerns about insurgent activities in Iraq. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

47 

Mayrow General Trading and Related Entities 

Although other countries share U.S. concerns about diversions by entities within third 

countries, no countries maintain controls similar to those implemented by the United 

States. 

North Korea 

The United States maintained a comprehensive trade embargo against North Korea for 

almost 50 years, until 1994. In general, during that time period, U.S. allies largely acted 

in concert with the United States to deny North Korea strategic equipment and 

technology. Similarly, the easing of U.S. sanctions toward North Korea and the removal 

of some U.S. controls in June 2000 were echoed by other Western countries. On October 

14, 2006, as a result of North Korea’s July 2006 missile tests and October 2006 nuclear 

test, the United Nations Security Council adopted USNCR 1718 imposing sanctions on 

North Korea. The Department has implemented the requirements of that Security 

Council resolution. Through the ongoing Six-Party Talks, the United States and its allies 

are working together to further reduce and eliminate the present nuclear threat posed by 

North Korea. 

Persons Sanctioned for Proliferation-related Activities 

Although other countries share U.S. concerns regarding the diversion of goods for use in 

proliferation-related programs, few countries maintain controls similar to those 

implemented by the United States. 

 

Sudan 

In 1997, the United States imposed an embargo in response to credible evidence that 

Sudan assisted international terrorist groups, destabilized neighboring governments, and 

violated human rights. Although Sudan’s cooperation in the war on terrorism since 2001 

has been significant and sustained, regularization of relations is contingent on, among 

other things, Sudan’s acceptance of an effective peacekeeping force in Darfur, as 

mandated by UN Security Council Resolutions 1706 and 1769. The United States 

remains in consultation with other countries regarding the humanitarian crisis in Darfur.

Syria 

The United States maintains controls in response to Syria’s lack of concrete steps to end 

its support for the terrorist groups that maintain a presence in Syria and Syria’s continued 

interference in Lebanon, including Syrian support of Hizballah. Although many other 

countries concur that Syria’s regional activities are destabilizing, few countries maintain 

controls similar to those implemented by the United States. 

Designated Terrorist Persons and Groups

Many countries support U.S. efforts to fight terrorism through blocking designated 

terrorist groups and individuals from acquiring commodities that could assist these 

groups in committing future acts of violence. Although some countries are considering 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

48 

restrictive legislation, very few maintain export controls similar to those implemented by 

the United States. 

United Nations Security Council Arms Embargoes

The arms embargoes on the Democratic Republic of Congo, Côte d’Ivoire, Liberia, 

Lebanon, Rwanda, Sierra Leone and Somalia are consistent with UN objectives. The 

U.S. Government has received no significant objections to these UNSC-mandated 

controls. 

4. Economic Impact on United States Industry. The Secretary has determined that 

any adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, does not exceed 

the benefit to U.S. foreign policy objectives. 

Burma 

Unilateral U.S. export sanctions on Burma have a minimal impact on U.S. industry. 

According to Census Bureau statistics, in 2006 U.S. exports to Burma were valued at 

$7.5 million and primarily consisted of food and medical equipment. In Fiscal Year 

2007, the Department of Commerce approved two license applications for Burma valued 

at $1.6 million. During the same time, one application valued at $90,000 was returned 

without action. No applications were denied during FY 2007.

Cuba

The U.S. Government requires a license for the export and reexport to Cuba of all U.S.-

origin commodities, technology, and software subject to the EAR. The number of license 

applications that the Department of Commerce has approved to Cuba increased 

significantly from 1998 through 2002, but has declined since 2003. The increase in 

approved export license applications to Cuba from 1998 through 2002 can be attributed 

to changes in U.S. export policies made during the late 1990s, including the resumption 

of direct flights, exports of medicines and medical supplies and equipment, exports of 

food and certain agricultural commodities, and the expansion of agricultural commodities 

eligible for export authorization under the procedures specified in License Exception 

AGR to the Cuban Government. The decline in approved export licenses to Cuba since 

2003 may, to some degree, be attributable to Cuba’s inability or unwillingness to meet 

financial transaction rules requiring the U.S. seller to receive payment from the Cuban 

buyer before vessels carrying goods leave U.S. ports. However, the decline may be more 

attributable to Cuba’s efforts to diversify import suppliers, particularly with the objective 

of strengthening strategic geo-political relationships. 

In Fiscal Year 2007, the Department of Commerce approved 216 license applications 

valued at over $1.3 billion for Cuba. There has been a decline in the number of license 

applications in Fiscal Year 2007 in comparison with Fiscal Years 2005 and 2006. In 

Fiscal Year 2007, the Department returned without action 105 license applications, 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

49 

valued at $517.7 million, and rejected 20 license applications, valued at $73.6 million. 

The Department did not revoke any previously valid licenses during this period. Also 

during Fiscal Year 2007, the Department authorized 148 notifications valued at $2.2 

billion under License Exception AGR. The Department of Commerce and reviewing 

agencies had no objections to these notifications. Normally, only about 10 percent of the 

value of items licensed is actually exported. 

Table 1: Approved Commerce Export License Applications and License Exception 

AGR Notifications Authorized for Cuba (FY 1996-2007)

Fiscal Year Number of Applications / 

Notifications

Total Value in U.S. Dollars

1996 83 $592,738,313 

1997 87 $493,414,819 

1998 128 $544,659,988 

1999 181 $75,840,789 

2000 310 $737,108,231 

2001* 241 $454,908,260 

2002 582 $2,521,457,648 

2003 528 $2,801,868,688 

2004 537 $3,096,634,000 

2005 483 $3,091,221,021 

2006 452 $2,840,600,000 

2007 364 $3,523,536,224 

TOTAL 3,976 $20,773,987,981 

* Notifications under License Exception AGR first became available in 2001.

The majority of export licenses approved for Cuba in Fiscal Year 2007 were for EAR99 

items, including medicines; medical supplies, instruments, and equipment; and gift 

parcels. 

The U.S. embargo on Cuba is unilateral. According to the CIA’s World Factbook 2007, 

Cuba imported an estimated $9.51 billion in commodities in 2006 (the most recent year 

for which statistics are available), up significantly from $6.91 billion the year before. 

Leading Cuban imports include petroleum, food, machinery and equipment, and 

chemicals. Cuba’s leading suppliers were Venezuela (27 percent), China (15.8 percent), 

Spain (9.7 percent), Germany (6.5 percent), Canada (5.6 percent), Italy (4.4 percent), and 

the United States (4.4 percent). 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

50 

Iran

The U.S. Government maintains a policy of denial for license applications for exports of 

items on the CCL to Iran, consistent with the provisions of the Iran-Iraq Arms NonProliferation Act of 1992, contained in the National Defense Authorization Act of Fiscal 

Year 1993 (NDAA), and the U.S. trade and investment embargo of 1995. Statistical data 

on past exports to Iran provide indications of the economic impact of sanctions, as 

mandated for this report. Prior to the 1993 NDAA and the imposition of the embargo, 

U.S. exports to Iran rose sharply in the early 1990s in response to Iran’s removal of 

certain import restrictions. From 1991 through 1994, U.S. exports to Iran totaled close to 

$2.2 billion, making the United States the sixth-largest exporter to Iran during this period. 

Such exports, however, amounted to only 5 percent of Iran’s total imports and less than 1 

percent of overall U.S. exports. As a result of the denial policy mandated by Fiscal Year 

1993 NDAA and the 1995 U.S. trade and investment embargo, U.S. exports to Iran fell 

dramatically. Beginning in 2001, as the result of the implementation of TSRA, the U.S. 

Government could authorize exports and reexports of food, agricultural equipment, 

medicine, and medical supplies and equipment. According to the U.S. Census Bureau 

statistics, in 2005 (the most recent year for which statistics are available), total U.S. 

exports to Iran were valued at $95.8 million. The top U.S. commodities exported to Iran 

were tobacco, medicines, pulpwood and wood pulp, and vegetable seeds. 

Since 1997, the Department of the Treasury has had primary jurisdiction for the export 

and reexport of items subject to the EAR to Iran, and the Department of Commerce has 

sole jurisdiction for “deemed exports” (transfers of controlled U.S. technology to Iranian 

nationals in the United States). In Fiscal Year 2007, the Department of Commerce 

approved 53 deemed export licenses for Iranian nationals. Table 2 shows the impact of 

the 1993 NDAA and the trade embargo on U.S. trade with Iran: 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

51 

Table 2: Approved Commerce Export License Applications to Iran (FY 1991-2007) 

Fiscal Year Number of Applications Total Value in U.S. Dollars

1991 89 $ 60,149,182

1992 131 $567,559,528

1993 44 $ 63,834,952

1994 10 $ 16,774,377

1995 0 $0

1996 0 $0

1997 5 $19

1998 6 $10,012

1999 10 $20,408

2000 23 $35

2001 19 $32

2002 10 $23

2003 16 $36

2004 31 $173

2005 31 $60

2006 38 $172

2007 53 $286

TOTAL 485 $708,349,295

The U.S. trade and investment embargo transformed the composition of U.S. trade with 

Iran. As Table 3 demonstrates, the agricultural, aerospace, and oil industries have been 

among those most directly affected by the embargo. From 1991 through 1994, U.S. 

exports of aircraft engine parts to Iran totaled nearly $9.4 million, averaging $2.3 million 

per year and peaking at more than $7.5 million in 1994. By 1996, aerospace exports to 

Iran declined to virtually zero. 

Prior to the embargo, the United States competed with Iran’s major trading partners in 

exports of industrial machinery, motor vehicles and auto parts, power generating 

machinery, measuring and controlling devices, computers, plastics and resins, and 

industrial organic chemicals. In 2005 (the most recent year for which figures are 

available), Iran imported an estimated $42.5 billion worth of industrial raw materials and 

intermediate goods, capital goods, foodstuffs and other consumer goods, technical 

services, and military supplies from its leading trade partners: Germany, France, Italy, 

China, the UAE, South Korea, and Russia. 

 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

52 

Table 3: Top U.S. Exports to Iran, 1991-1995 (FAS Value, in U.S. Dollars) 

S.I.C. Number Description of Goods Total Value

3511 Turbines and turbine generator sets $322.5 million

3531 Construction machinery and parts $307.8 million

3533 Oil and gas field equipment $250.1 million

2044 Milled rice and by-products $166.3 million

0115 Corn $137.4 million

2873 Nitrogenous fertilizers $124.2 million

3714 Motor vehicle parts and accessories $50.8 million

2821 Plastics materials and resins $45.4 million

3743 Railroad equipment and parts $42.7 million

3569 General industrial machinery and equipment $41.8 million

The U.S. embargo on Iran has had a damaging impact on U.S. industry, because of the 

reaction of foreign firms to U.S. reexport requirements. U.S. exporters report that their 

products are often designed out of foreign manufactured goods to ensure that foreign 

exports do not fall within the scope of U.S. controls. This “designing out” damages U.S. 

exports, both for sales to embargoed countries and non-embargoed countries. 

Iraq

Although the security situation and the presence of insurgents in Iraq, among other 

issues, continue to be of concern to the United States, the United States also fully 

supports Iraq’s reconstruction and economic revival. Current licensing policy and 

requirements reflect the complexity and challenges of doing business in Iraq. 

In 2006, according to the most recent U.S. Census Bureau statistics available, U.S. 

exports to Iraq were worth $1.49 billion. In addition to foodstuffs, other strong 

categories of U.S. exports to Iraq included aircraft parts; passenger motor vehicles; 

drilling equipment; special purpose vehicles (i.e. ballistic-protected cars); and 

telecommunications equipment. 

Commerce’s July 30, 2004, rule on U.S. export control policy and regulations for Iraq 

was designed to address two significant foreign policy goals. In particular, the rule 

advances the goal of ensuring that exports and reexports of controlled items destined to 

civil infrastructure rebuilding are processed in a timely manner. At the same time, in 

furtherance of applicable UNSC Resolutions and U.S. foreign policy interests, the rule 

revised section 746.3 of the EAR (15 CFR parts 730-774) and retains substantial 

restrictions on exports to Iraq destined for inappropriate end-users or end-uses. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

53 

Since licensing jurisdiction for Iraq was returned to the Department of Commerce, the 

majority of license applications received have been for equipment in support of or for use 

in reconstruction of Iraq and training activities for its police and military. The 

Department expects that the number and diversity of applications will increase as more 

U.S. companies extend operations into Iraqi civil activities. 

Mayrow General Trading and Related Entities 

The Secretary has determined that the effect of these foreign policy controls on U.S. 

industry will be minimal because the volume of U.S. export and reexport transactions 

involving Mayrow General Trading and related entities is limited within the context of 

the overall level of shipments of the specific items. The Department did not process any 

license applications for Mayrow General Trading or any of the related entities in 2007. 

North Korea

As a result of the small size of the North Korean economy, U.S. export sanctions on 

North Korea have had a minimal impact on U.S. industry. North Korea’s total imports 

average about $1-2 billion annually, with primary imports including minerals, 

metallurgical products and manufactured goods, including armaments, textiles and 

fishery products. The CIA World Factbook estimates that North Korean imports totaled 

$2.8 billion in 2004 (the most recent year for which figures are available) with primary 

imports including minerals, metallurgical products and manufactured goods (including 

armaments, textiles and fishery products). North Korea’s leading sources of imports in 

2004 were China (45.6 percent), South Korea (20.2 percent), and Japan (12.9 percent).

Based on U.S. Census Bureau statistics, total U.S. exports to North Korea, although far 

below the levels of other countries, generally increased with the signing of the U.S.-North 

Korea Agreed Framework in October 1994, but exports have again dropped substantially 

in recent years. Exports rose from only $179,730 in 1994 to between $3 and $4 million 

annually from 1995 through 1998. In 1999, U.S. exports to North Korea nearly tripled to 

$11.3 million. However, in 2000, U.S. exports dropped to $2.7 million and in 2001, the 

value of U.S. exports was only $650,000. In 2002, U.S. exports to North Korea increased 

to $25 million, the vast majority (95 percent) of which was agricultural products. In 

2003, the level of exports dropped to $8.0 million with agricultural products again 

comprising the majority of exports (80 percent), followed by pharmaceutical preparations 

(16 percent). In 2004, the level of exports rose to $23.8 million with corn and wheat 

accounting for over half of total exports, followed by unmanufactured agricultural 

industry products and other foodstuffs. Agricultural products as a whole accounted for 

99 percent of total U.S. exports to North Korea in 2004. In 2005, the value of U.S. 

exports to North Korea was $5.8 million. As in previous years, exports were comprised 

primarily of agricultural products (98 percent), mainly wheat, soybeans and vegetables. 

The remaining 2 percent was comprised of finished textile supplies valued at $100,000. 

In 2006, according to Census Bureau statistics, exports to North Korea dropped to the 

lowest level in the past decade, with only $3,113 in books and printed matter shipped. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

54 

Table 4: U.S. Exports to North Korea (in millions of dollars) 

2000 2001 2002 2003 2004 2005 2006 

$2.7 $0.6 $25.0 $8.0 $23.8 $5.8 $.003 

SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, 

Washington, D.C. 20233

Export license applications approved by the U.S. Government for North Korea increased 

from six licenses in Fiscal Year 1994 to an annual average of 38 licenses in Fiscal Years 

1995-1999 (see Table 5). However, since Fiscal Year 2000, the Department has 

approved fewer than ten licenses per year. In 2006, BIS approved one license valued at 

$217,519, rejected one license worth $126,430, and returned nine licenses with a total 

value of $292,197 without action. 

On September 17, 1999, as a result of North Korea’s actions at that time, President 

Clinton announced a decision to ease sanctions maintained against North Korea. 

Implemented in June 2000, the new policy made most U.S. consumer goods, including 

humanitarian goods and low-level consumer items, eligible for export without a license to 

North Korea. This change helps to account for the decline in license applications for 

North Korea since Fiscal Year 2000. 

After North Korea’s test launch of ballistic missiles and conduct of a nuclear test in 2006, 

and consistent with UNSCRs 1695 and 1718, the Department of Commerce amended the 

EAR to implement additional license requirements for exports and reexports of all items 

subject to the EAR to North Korea, with the exception of food and EAR99 medicines 

(i.e., medicines subject to the EAR but not controlled on the Commerce Control List 

(CCL)). The Department also revised its license review policy for exports and reexports 

to North Korea certain classes of items and made most license exceptions unavailable for 

North Korea. This change accounts for the upsurge in the number of license applications 

filed for North Korea in FY 2007. 

Table 5: Export License Applications Commerce 

Approved for North Korea (Fiscal Year 1994-2007) 

Fiscal Year Number of Applications Total Value in U.S. Dollars

1994 6 $66,443 

1995 27 $366,498,433 

1996 39 $209,134,369 

1997 47 $393,281,396 

1998 43 $129,113,580 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

55 

Fiscal Year Number of Applications Total Value in U.S. Dollars

1999 32 $407,887,147 

2000 10 $31,130,643 

2001 7 $1,187,232 

2002 9 $2,947,044 

2003 0 $0 

2004 3 $140,625 

2005 3 $15,665 

2006 1 $217,519 

2007 9 $26,435,444 

TOTAL 236 $1,568,055,540 

Persons Sanctioned for Proliferation-related Activities 

The impact on U.S. industry of these controls is minimal as they target one entity at this 

time, Tula Design Bureau. In 2007, the Department did not receive any license 

applications involving Tula Design Bureau. 

Sudan

U.S. unilateral export sanctions on Sudan have had a minor impact on U.S. industry. 

Before the U.S. embargo went into effect on November 4, 1997, most of the small 

number of items that Sudan imported from the United States did not require an export 

license and, thus, were not affected by export controls. According to Census Bureau 

statistics, in 2005, U.S. exports to Sudan were valued at $108.1 million, and primarily 

consisted of agricultural exports. The CIA estimates that Sudan’s total imports from all 

sources were valued at $5.0 billion in 2005. Leading suppliers to Sudan were China, 

Saudi Arabia, the UAE, Egypt, Japan, and India. Leading imports were foodstuffs, 

manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, 

and wheat. 

After the United States imposed sanctions in 1997, the Treasury Department assumed 

licensing responsibility for the export and reexport of items subject to the EAR to Sudan. 

However, the Department of Commerce’s regulations remained in place. Therefore, 

exporters are required to obtain authorization to export items controlled on the CCL to 

Sudan from both Treasury and Commerce. Starting in November 2004, the two agencies 

began to process applications simultaneously to minimize shipping delays, especially for 

non-governmental humanitarian organizations. Previously, applicants were instructed to 

obtain authorization from Treasury before submitting an application to Commerce. In 

addition, the Department of Commerce has licensing jurisdiction for the “deemed export” 

of technology to Sudanese nationals. The Department of the Treasury is solely 

responsible for licensing the export of agricultural commodities, medical items not listed 

on the CCL under the provisions of TSRA, and other items not listed on the CCL. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

56 

In support of humanitarian efforts, the Department of Commerce approved 64 license 

applications for Sudan in Fiscal Year 2007 valued at $40 million. During the same time, 

30 applications valued at $3.5 million were returned without action. Most of these 

applications were for EAR99 items that did not require a BIS license for export to Sudan. 

No applications were denied during Fiscal Year 2007. 

Table 6: Approved Licenses for Sudan (FY 1992 to FY 2007)

Fiscal Year Total Applications Approved Total Value (in U.S. dollars)

1993 2 $5,404,000

1994 0 $0

1995 0 $0

1996 7 $571,992

1997 10 $7,095,973

1998 0 $0

1999 1 $1

2000 1 $1

2001 0 $0

2002 0 $0

2003 0 $0

2004 4 $10,646,641

2005 29 $20,246,720

2006 42 $26,955,168

2007 64 $40,207,142

TOTAL 160 $111,127,638

Syria

The U.S. Government requires a license for the export and reexport to Syria of all U.S.-

origin commodities, technology, and software subject to the EAR except for food and 

certain medicine. The number of license applications that the Department of Commerce 

approved to Syria declined from 2003 to 2004 following implementation of the SAA but 

doubled in 2005 apparently because license applicants better understood that certain 

categories of items, particularly medical devices and telecommunications equipment, 

were approvable based on the Presidential waiver exercised when the SAA was 

implemented. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

57 

Table 7: Approved Commerce Export License Applications for Syria 

(FY 1991-2007)

Fiscal Year Total Applications Approved Total Value (in U.S. dollars)

1991 8 $1,041,504

1992 31 $46,366,527

1993 106 $42,896,103

1994 167 $76,379,096

1995 139 $68,298,135

1996 80 $81,006,877

1997 100 $107,003,346

1998 81 $80,707,010

1999 100 $86,534,591

2000 121 $141,539,669

2001 106 $70,269,323

2002 95 $108,101,460

2003 127 $200,664,118

2004 100 $246,979,100

2005 210 $325,088,347

2006 168 $257,417,642

2007 231 $1,036,749,878

TOTAL 1,990 $2,977,042,726

In Fiscal Year 2007, the Department of Commerce approved 231 license applications, 

valued at $1.04 billion for Syria. This reflects a significant increase from Fiscal Year 

2006, apparently resulting from demand for U.S. medical and telecommunications 

exports as Syria expands and modernizes its infrastructure in those sectors. The 

Department returned without action 62 license applications, valued at $82.4 million, and 

rejected 7 license applications, valued at $6.5 million. The Department did not revoke 

any previously valid licenses. Of note, the Department received numerous informal 

inquiries from potential export license applicants who chose not to submit an application 

because no Presidential waivers to the SAA apply to the items that they proposed for 

export (such as food processing equipment and computers and software for general 

academic and business use). 

Only the United States maintains comprehensive sanctions on Syria. According to the 

CIA’s World Factbook 2007, Syria imported an estimated $6.63 billion in commodities 

in 2006 (the most recent year for which statistics are available), up slightly from $5.97 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

58 

the year before. Leading Syrian imports include machinery and equipment, food, metals, 

chemicals, and plastics. Syria’s leading suppliers were Saudi Arabia (12.1 percent), 

China (7.8 percent), Egypt (6.1 percent), the United Arab Emirates (5.9 percent), Italy 

(4.8 percent), Ukraine (4.7 percent), Germany (4.7 percent), and Iran (4.4 percent). 

Designated Terrorist Persons and Groups

The Department of Commerce did not review any license applications for SDGTs, SDTs, 

or FTOs in Fiscal Year 2006. As a result, the economic impact of these controls is 

presumably minimal. The Department of the Treasury maintains restrictions on activities 

of U.S. persons involving designated terrorist entities, which the Department of 

Commerce’s controls augment. 

United Nations Security Council Arms Embargoes 

Rwanda

The arms embargo on Rwanda has had little impact on U.S. industry. Total Rwanda 

imports were estimated to be valued at $390 million in 2006. Leading imports for 

Rwanda were foodstuffs, machinery, steel, petroleum, cement, and construction material. 

Leading sources of Rwandan imports were Kenya, Germany, Uganda, and Belgium. In 

2006, U.S. exports to Rwanda were valued at $11.7 million, and primarily were 

comprised of foodstuffs, donated items, medicines, and telecommunications equipment. 

The Department of Commerce did not receive any license applications for arms-related 

items to Rwanda in 2007. 

5. Effective Enforcement of Controls 

The Secretary has determined the United States has the ability to effectively enforce these 

controls. Controls on exports to embargoed and sanctioned countries and persons, 

including those discussed in this chapter, raise a number of challenges. These include the 

need to concentrate limited resources on priority areas, developing new strategies to limit 

reexport violations, strengthening the cooperative relationship with other law 

enforcement agencies in the United States and overseas, and maintaining a consistent 

outreach effort to help limit U.S. business vulnerability. Overall, the embargoes are 

generally understood and supported by the U.S. public. Voluntary cooperation from most 

U.S. exporters is common. 

A number of enforcement actions regarding non-compliance with these export controls 

occurred during Fiscal Year 2007. For example: 

Aircraft Parts: On October 13, 2006, Ernest Koh, doing business as Chong Tek, was 

sentenced to 52 months imprisonment after his conviction at trial on May 18, 2006, in 

connection with obtaining U.S. aircraft parts that can be used in C-130 military transport 

planes and P-3 Naval Aircraft, and diverting those parts to Malaysia for transshipment to 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

59 

Iran. In addition, the jury found that Koh had laundered millions of dollars from his bank 

accounts in Singapore through accounts in the United States to promote the ongoing 

illegal scheme. 

Falsification on Self Disclosure: On November 3, 2006, EPMedSystems, Inc., of West 

Berlin, New Jersey, was fined $244,000 for charges related to the unlicensed export of 

EAR99 commodities to Iran and falsifying a Voluntary Self Disclosure (VSD). EPMed 

was administratively charged with substantive export counts, as well as counts of acting 

with knowledge, acting to evade the requirements of the EAR, conspiracy to export, and 

false statements. 

Tensile Strength Measuring Equipment: On November 30, 2006, Juan Sevilla, Sales 

Director of United Calibration Corporation of Huntington Beach, California, was 

sentenced to five years probation, six months home confinement, 100 hours community 

service, and a $10,000 criminal fine for violating the IEEPA by attempting to illegally 

export machinery and related software to measure the tensile strength of steel to Iran in 

violation of the U.S. embargo. 

Tractor Parts: On June 14, 2007, Saied Shahsavarani, President of Tak Components, 

Inc., pled guilty to one count of aiding and abetting the operation of an unlicensed money 

transmitting business. On behalf of Tak Components, Shahsavarani also pled guilty to 16 

counts of violating the IEEPA. Tak Components knowingly conducted a series of at least 

16 export shipments of equipment described as "gaskets, bearing balls, auto parts, oil or 

fuel filters and other parts and accessories for tractors" from the United States to Iran. 

Shahsavarani declared in shipping documents that the end destination for each shipment 

was in Dubai, UAE, concealing that the intended final destination for the equipment was 

Iran. 

Laboratory Equipment: On July 17, 2007, in U.S. District Court, Eastern District of New 

York, James Gribbin, of Long Island, New York, pled guilty to conspiracy. Gribbin's 

plea was entered in connection with his involvement in the illegal export of laboratory 

equipment to Iran. On June 15, 2007, Patrick Gaillard, President of Oyster Bay Pump 

Works, Hicksville, New York, pled guilty to conspiracy to violate the IEEPA. In 

November 2006, Gaillard, through his company Oyster Bay Pump Works, attempted to 

export two laboratory equipment systems, valued collectively at approximately $300,000, 

to Iran via an intermediary in the UAE without the required export license. 

Aircraft Parts: On July 30, 2007, Ali Khan, owner of TurboAnalysis, Phoenix, Arizona, 

was sentenced in U.S. District Court, Eastern District of New York, Brooklyn, in 

connection with his role in a conspiracy to illegally export aircraft components to Iran. 

Khan was sentenced by Judge John Gleeson to serve five years probation, perform 300 

hours of community service and pay $1.4 million dollars in forfeiture, $100,000 in 

criminal fines. Khan previously pled guilty to one count of conspiracy to violate the 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

60 

International Emergency Economic Powers Act, in violation of Title 18 U.S.C. Section 

371, in September of 2005. Khan also paid an $110,000 administrative fine pursuant to a 

Final Order signed on August 8, 2005, in connection with the aforementioned shipments. 

C. Consultation with Industry

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

The U.S. Government has made reasonable efforts to achieve the purposes of the U.S. 

embargoes and sanctions through negotiations with other countries, through international 

fora, and through the United Nations, as outlined in the specific country descriptions that 

follow. 

Burma 

The United States consults frequently with other countries, the Association of South-East 

Asian Nations, and the United Nations regarding the Government of Burma’s repression 

of the democratic opposition in that country. Additionally, the United States has 

vigorously communicated its concerns to the Government of Burma directly. 

Cuba

The Administration has worked diligently with other nations, especially countries in 

Europe and Latin America, to resolve disputes that arise as result of the U.S. embargo. 

Differences remain between the United States and other countries concerning the best 

method to encourage democracy and human rights. However, many nations share with 

the United States the ultimate goal of a free, peaceful, democratic, and market-oriented 

Cuba. 

Iran

The United States has an ongoing dialogue with its allies and partners on Iran’s activities, 

particularly with members of the United Nations Security Council, the International 

Atomic Energy Agency (IAEA) Board of Governors, and the European Union. The 

United States continues to work with other states to prevent Iran’s acquisition of a 

nuclear weapons capability and to increase the pressure on Iran to change its current 

confrontational course to one of accepting negotiations on the basis of compliance with 

its international obligations. To that end, the United States is also working with the 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

61 

IAEA to ensure that it has the capabilities it needs to provide information to the 

international community about Iran’s nuclear program, to verify Iranian declarations with 

respect to that program, and to execute UNSC requests to verify/monitor Iranian 

suspension of its proliferation sensitive nuclear activities, as required in UNSC 

Resolutions 1737 and 1747. 

Iraq

Prior to Operation Iraqi Freedom and the lifting of the embargo on Iraq, the United States 

maintained an ongoing dialogue with other United Nations member states, as well as 

separately, with its allies and partners. Since the lifting of the embargo, the United States 

has continued discussions with many other countries on both a bilateral and multilateral 

basis. 

Mayrow General Trading and Related Entities 

The United States consults regularly with the Government of the UAE regarding 

improvement of the Emiratis’ federal export control system. Additionally, the United 

States has consulted with other countries, including but not limited to those in which 

entities designated under General Order No. 3 are located. 

North Korea 

The United States continues to seek the verifiable denuclearization of North Korea 

through the Six-Party Talks, which include China, the Democratic People's Republic of 

Korea (North Korea), Japan, the Republic of Korea (South Korea), and Russia. In the 

September 2005 Joint Statement, “The Six Parties unanimously reaffirmed that the goal 

of the Six-Party Talks is the verifiable denuclearization of the Korean Peninsula in a 

peaceful manner.” The February 13, 2007, Initial Actions for the Implementation of the 

Joint Statement provided for the establishment of five working groups to carry out the 

initial actions and for the purpose of full implementation of the Joint Statement. These 

are the Working Groups on Denuclearization of the Korean Peninsula; Normalization of 

Democratic People’s Republic of Korea (DPRK) - U.S. Relations; Normalization of 

DPRK- Japan- Relations; Economy and Energy Cooperation; and Northeast Asia Peace 

and Security Mechanism. The United States welcomed the completion of first phase 

actions under the Initial Actions agreement, including the shut down and sealing of the 

Yongbyon nuclear facility and the return of IAEA personnel to conduct monitoring and 

verification activities. On October 3, 2007, the six parties issued the Second-Phase 

Actions for the Implementation of the Joint Statement, in which the DPRK agreed to 

provide a complete and correct declaration of all its nuclear programs and to disable all 

existing nuclear facilities subject to the Joint Statement and the February 13 Initial 

Actions agreement by the end of 2007. 

Persons Sanctioned for Proliferation-related Activities The United States consulted 

with the Government of Russia prior to the imposition of sanctions on the Russian entity. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

62 

Additionally, the United States consults on a regular basis with other countries on 

proliferation and trafficking-related issues. 

Sudan

The United States continues to consult with other countries regarding the internal conflict 

in Sudan and the humanitarian needs of the population. Many of these consultations have 

occurred within the United Nations as well as the Intergovernmental Authority on 

Development (IGAD), which is the entity that sponsored the peace talks between the 

Government of Sudan, and the Sudan People’s Liberation Movement/Army (SPLM/A). 

Syria 

The United States is in constant communication with other countries regarding the Syrian 

Government’s interference in Lebanon and support for terrorism. Additionally, the 

United States has communicated its concerns to the Government of Syria directly and 

forcefully through the U.S. Embassy in Syria and the Syrian Ambassador in Washington. 

Designated Terrorist Persons and Groups 

The United States cooperates with allies and partners and shares information on the 

activities of designated terrorist entities. It is expected that strong international support 

for the U.S. fight against terrorism will further facilitate dialogue on foreign export 

control expansion. 

United Nations Security Council Arms Embargoes 

Most countries support international efforts to stabilize Rwanda and other affected 

countries in order to prevent further ethnic conflict and regional instability, including 

through compliance with the United Nations arms embargoes. 

E. Alternative Means 

The U.S. Government imposes embargoes and sanctions in an effort to make a strong 

statement against a particular country’s policies or a person’s actions. Restrictions on 

exports can supplement other actions that the U.S. Government takes to change the 

behavior of the target countries and persons, including such actions as severing 

diplomatic relations, banning imports into the United States, seeking UN denunciations, 

and curtailing or discouraging bilateral educational, scientific, or cultural exchanges. The 

U.S. Government has had some success using these alternative means to reach the 

intended foreign policy objectives. Nonetheless, these trade sanctions remain a critical 

part of the U.S. Government’s foreign policy. U.S. Government embargoes and 

sanctions complement diplomatic measures and continue to be used to influence the 

behavior of these countries. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 5 Embargoes and Other Special Controls 

63 

F. Foreign Availability

The foreign availability of items controlled under Section 6(a) has been considered by the 

Department of Commerce. In general, numerous foreign sources of commodities and 

technology similar to those subject to these controls are known, especially for items 

controlled by the U.S. Government. Although the embargoes and comprehensive 

sanctions described in this chapter are widely followed and many have significant 

multilateral support, the U.S. Government’s continued use of embargoes and sanctions 

serve foreign policy interests that override the impact of foreign availability.

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

64 

CHAPTER 6 

Toxic Chemicals, Chemical Precursors, and Associated Equipment, 

Technology, and Software 

(Sections 742.2, 742.18, 744.4, 744.6, and 745)7

Export Control Program Description and Licensing Policy

The U.S. Government maintains export controls on certain chemicals, equipment, 

materials, software, technology, and entire plants to further U.S. foreign policy, which 

opposes the proliferation and use of chemical weapons. The U.S. Government 

implements these controls in coordination with the Australia Group (AG), an informal 

forum of 40 nations and the European Commission that cooperate to halt the proliferation 

of chemical and biological weapons. (See Appendix II for a complete list of AG 

members.) The United States fulfills its obligations under the Chemical Weapons 

Convention (CWC) by maintaining controls on certain chemicals.8

Australia Group Controls

The AG was formed in 1985 when the United States and 14 other nations agreed on the 

need to enhance cooperation and harmonize national licensing measures on a number of 

chemicals that could be used to produce chemical weapons. Since then, the AG has 

expanded its membership and has expanded its export control list to cover various 

chemical and biological weapons-related items. AG member countries use the AG 

control list and guidelines as a basis for developing and imposing their national export 

controls. The AG has a no-undercut policy, requiring consultation with a partner that has 

previously denied an AG-controlled export pursuant to AG guidelines, if the transaction 

is essentially identical. 

License Requirements and Licensing Policy for AG Controls 

The licensing requirements for chemicals, equipment, materials, software, technology, 

and entire plants imposed in accordance with AG commitments are noted below. There 

are 14 entries on the Commerce Control List (CCL) that are subject to chemical controls. 

 

7 Chapter 7 of this report addresses U.S. biological controls.

8 The Convention on the Prohibition of the Development, Production, Stockpiling and 

Use of Chemical Weapons and on their Destruction (the “Chemical Weapons 

Convention” or CWC) was ratified by the United States on April 25, 1997, and entered 

into force on April 29, 1997. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

65 

A. The U.S. Government requires a license for the export to all destinations other 

than AG member countries of AG-controlled precursor and intermediate chemicals, 

which can be used in the production of toxic chemical warfare agents; as well as relevant 

process control software; technology for the use, production, and/or disposal of such 

items; and the facilities designed to produce them. 

The U.S. Government requires a license for the export to all destinations other than AG 

member countries of certain chemical manufacturing facilities and equipment, toxic gas 

monitoring systems, and detectors that can be used in the production of chemical warfare 

agents, and the technology for the use of such items. The countries to which these 

licensing requirements apply are listed in Column CB2 of the Commerce Country Chart, 

Part 738, and Supplement No. 1 of the Export Administration Regulations (EAR). These 

licensing requirements also apply for the export of these items to designated terroristsupporting countries. 

The U.S. Government also controls items subject to the EAR because of chemical or 

biological end-use or end-user concerns. These controls are part of the Enhanced 

Proliferation Control Initiative (EPCI), announced by President George H. W. Bush on 

December 13, 1990. 

• The U.S. Government requires a license for the export of any commodity, 

technology, or software to all destinations, worldwide, including to AG member 

countries, when the exporter knows that it will be used in the design, 

development, production, stockpiling, or use of chemical weapons. In addition, 

the U.S. Government may inform an exporter or reexporter that a license is 

required due to an unacceptable risk that the items will be used in, or diverted to, 

chemical weapons proliferation activities anywhere in the world. 

• No U.S. person may knowingly support such an export, reexport, or transfer 

without a license. “Support” is defined as any action, including financing, 

transportation, or freight forwarding that facilitates the export, reexport, or 

transfer of these items. 

• In addition, no U.S. person may, without a license, perform any contract, service, 

or employment knowing that it will directly assist in the design, development, 

production, stockpiling, or use of chemical weapons in, or by, any country or 

destination worldwide. 

B. The Department of Commerce, in coordination with the Departments of Defense, 

Energy, and State, reviews applications for licenses to export AG-controlled items on a 

case-by-case basis to determine whether the export would make a material contribution to 

the design, development, production, stockpiling, or use of chemical weapons. When the 

Department of Commerce determines from an interagency review that an export will 

make such a contribution, the Department will deny the license. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

66 

Trade Restrictions under the Chemical Weapons Convention 

The Chemical Weapons Convention (CWC), which entered into force in April 1997, bans 

the development, production, stockpiling, retention, use, or transfer of chemical weapons, 

and establishes an extensive verification regime. The CWC Annex on Chemicals groups 

specified chemicals, including toxic chemicals and chemical precursors, into three 

“Schedules.” Chemicals are listed in a schedule based on factors specified in the 

Convention, such as the level of toxicity and other properties that enable their use in 

chemical weapons. The toxic chemicals and precursors on Schedule 1 were previously 

developed or used as chemical weapons, or pose a high risk based on the dangers 

identified in the Convention and have few, if any, commercial applications. The toxic 

chemicals and precursors on Schedule 2 pose a significant risk in light of the dangers 

identified in the CWC and are not produced in large commercial quantities. The toxic 

chemicals and precursors on Schedule 3 have been produced or used as chemical 

weapons or pose a risk based on the dangers identified in the CWC, and may be produced 

in large commercial quantities. The Department of State, under the International Traffic 

in Arms Regulations, controls the chemical warfare agents deemed to have military 

application, which by their ordinary and direct chemical action produce a powerful 

physiological effect. 

License Requirements and Licensing Policy for CWC Controls

The export restrictions and licensing requirements for chemicals and technology imposed 

in fulfillment of CWC treaty obligations are as follows: 

A. Exports of Schedule 1 chemicals subject to Department of Commerce jurisdiction 

are banned to destinations in countries that have not ratified or acceded to the CWC. The 

United States requires a license and prior notification of a planned export of Schedule 1 

chemicals to all States Party to the CWC, including Canada. A license is also required 

for the shipment of Schedule 2 chemicals to States not Party to the CWC. Under the 

CWC, the governments of States not Party to the CWC are required to provide end-use 

certificates for imports of Schedule 3 chemicals. 

B. The U.S. Government’s policy is to review export license applications for 

Schedule 1 chemicals to States Party to the CWC on a case-by-case basis. The 

Department of Commerce approves exports only to States Party and only for purposes 

not prohibited by the treaty. The U.S. Government has a policy of denial for the export 

of Schedule 1 chemicals to States not Party to the CWC. 

The U.S. Government has a general policy of denial for applications to export Schedule 2 

chemicals to States not Party to the CWC. The U.S. Government also will generally deny 

applications to export Schedule 3 chemicals to States not Party to the CWC, unless the 

importing country provides an end-use certificate. 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

67 

In addition, the U.S. Government reviews exports and reexports of technology related to 

the development and production of mixtures containing PFIB, phosgene, cyanogen 

chloride, and hydrogen cyanide on a case-by-case basis. There is a policy of denial for 

export of these technologies to Cuba, Iran, Sudan, Syria, and North Korea. 

Summary of 2007 Changes 

On September 12, 2007, the Department of Commerce published a final rule in the 

Federal Register (72 FR 52000) implementing changes made to the Commerce Control 

List (CCL) deriving from understandings reached at the June 2007 AG Plenary meeting. 

Among other changes, the rule made conforming changes to the EAR and CCL as a result 

of Croatia joining the AG; and clarified treatment of exports to Macau as being identical 

to treatments of exports to China for export control purposes. 

Analysis of Control as Required by Section 6(f) of the Act

A. The Purpose of the Controls

The purpose of these controls is to support the efforts of the AG to halt the development 

and production of chemical weapons and to comply with international obligations under 

the CWC. In addition, these controls implement certain measures specified in Executive 

Order 12735 of November 16, 1990, its successor, Executive Order 12938 of November 

14, 1994, and the Enhanced Proliferation Control Initiative (EPCI) announced on 

December 13, 1990. In so doing, the controls provide the U.S. Government with the 

authority to regulate the export of any item from the United States when there is a 

significant risk that it will be used for chemical weapons proliferation purposes. 

The AG works to further nonproliferation objectives through harmonizing export 

controls, exchanging information, and other diplomatic means. In addition to furthering 

the objectives of the AG, these controls support U.S. compliance efforts with the CWC. 

To ensure that States Party to the Convention do not transfer chemicals that could assist 

States not Party to the CWC in acquiring chemical weapons, the CWC requires that 

States Party restrict the export of certain chemicals listed in the CWC’s Annex on 

Chemicals. The controls also support the goals of the 1925 Geneva Protocol for the 

Prohibition of the Use in War of Asphyxiating, Poisonous or other Gases, and of 

Bacteriological Methods of Warfare. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including availability of relevant items from other 

countries, and that the foreign policy purpose cannot fully be achieved through 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

68 

negotiations or other alternative means. Many of the items covered by these controls 

have commercial uses and are widely available from foreign sources. Some of the major 

sources of these items are located in industrialized countries that are members of the AG 

and are States Party to the CWC. Although it is not expected that export controls alone 

can prevent the proliferation of chemical weapons, these controls strengthen U.S. and 

like-minded states’ efforts to stem the spread of such weapons and continue to be a 

significant part of the overall nonproliferation strategy of the United States. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and that the extension 

of these controls will not have any significant adverse foreign policy consequences. The 

U.S. Government has a strong interest in remaining at the forefront of international 

efforts to stem the proliferation of chemical weapons. These controls are compatible with 

the multilateral export controls for chemicals and related equipment and technology 

agreed to by the AG. Moreover, the U.S. Government has a binding international 

obligation under the CWC to prohibit and eliminate chemical weapons; not to assist 

anyone, in any way, in chemical weapons activities; and to control certain chemical 

exports. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

The U.S. Government continues to discuss chemical export controls with countries 

outside of the AG to advance the goals of nonproliferation. The governments of some 

developing countries claim that AG export controls discriminate against less 

industrialized nations by depriving them of goods and assistance in the field of chemical 

technology. The United States considers that these assertions are incorrect. In fact, in 

international fora, the U.S. Government has sought to dispel this perception by clarifying 

the purpose of the controls and by demonstrating that the U.S. Government denies few 

export license requests for shipment to developing countries. 

4. Economic Impact on United States Industry. The Secretary has determined that 

any adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, does not exceed 

the benefit to U.S. foreign policy objectives. 

In Fiscal Year 2007, the Department of Commerce approved 2,564 license applications, 

valued at $809,820,702, for the export or reexport of chemical precursors and equipment. 

The majority of the value of these approvals (69.5 percent) were for precursor chemicals 

controlled under ECCN 1C350, which are chemicals that have many commercial uses. 

Almost all of the remaining value of these approvals (29.8 percent) were for chemical 

equipment controlled under ECCN 2B350, which is equipment with many commercial 

uses. The Department denied 3 license applications valued at $171,217 and returned 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

69 

without action 206 license applications valued at $62,581,910. The primary reason for 

returning applications was for insufficient information about the transaction. The actual 

trade in these controlled commodities is significantly greater than the value of the license 

applications submitted because exporters may export many of these commodities to AG 

member countries without a license. 

5. Effective Enforcement of Control. The Secretary has determined the United 

States has the ability to enforce these controls effectively. The size, dispersion, diversity, 

and specialized nature of the dual use chemical industry make detecting and investigating 

potential violations difficult for enforcement personnel. Challenges include 

distinguishing commercial procurement from chemical weapons-related transactions, and 

establishing appropriate commodity thresholds for targeting and tracking exports and 

reexports for verification of end-use and end-users. It is also difficult to detect and 

investigate cases under the “knowledge” standard set by the EPCI “catch-all” provision 

and some countries have different standards for “catch-all,” which complicates law 

enforcement cooperation. In addition, enforcement officers may be exposed to personal 

safety risks when seizing and inspecting chemical materials. 

To meet the challenge of effective enforcement of these controls, the Department of 

Commerce has directed resources toward preventive enforcement, in addition to 

continued efforts to pursue all leads provided by intelligence, industry, and other sources 

on activities of concern. Also, the Department of Commerce’s extensive outreach 

program educates companies about export controls related to chemical products and helps 

prevent the illegal export of dual-use products that can be used to make chemical 

weapons. In cases where unlicensed shipments of chemical materials have already taken 

place, the Department of Commerce has found that, as in other export control 

enforcement cases, analysis of commercial shipping documentation can lead to successful 

investigations and prosecutions. 

C. Consultation with Industry

The Department of Commerce interacts with the chemical industry in a number of ways, 

including with individual companies seeking export licenses, through the Technical 

Advisory Committees (TACs), and through trade associations. The Department consults 

regularly with exporting firms on proposed export transactions and marketing plans to 

facilitate the thorough, yet prompt, review of export license applications. Through the 

TACs, the Department keeps industry representatives abreast of proposals for the review 

of items on the Control List and gives them the opportunity to provide technical input. 

The Department of Commerce works with chemical industry associations, including the 

American Chemistry Council and the Synthetic Organic Chemical Manufacturers 

Association, and with government agencies such as the Federal Bureau of Investigation 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

70 

and the Department of Defense, to gain valuable input regarding CWC implementation 

and to meet the United States’ CWC responsibilities. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

These controls are consistent with the multilateral export control criteria of the AG, 

which includes many of the world’s major chemical producers and traders. As such, the 

controls have been agreed through negotiations with the member countries of the AG. In 

addition, a number of non-AG countries, including Russia and China, have taken steps to 

adopt AG-type controls. An important element of the AG’s efforts to curb the 

development of chemical weapons is contacting non-members to encourage them to 

observe similar export controls. The U.S. Government continues to encourage 

harmonization of export control provisions among AG participants to ensure a level 

playing field for U.S. exporters. 

E. Alternative Means

The U.S. Government continues to address the problem of the proliferation of chemical 

weapons on a number of fronts. Direct negotiations with countries intent on acquiring 

chemical weapons are not likely to prevent the use of controlled materials in such 

activities, nor are such negotiations likely to affect the behavior of these countries. 

Alternative means to curtail the acquisition and development of chemical warfare 

capabilities, such as diplomatic negotiations, do not obviate the need for controls. 

Examples of additional means that the U.S. Government has used, and will continue to 

use, in an attempt to curb the use and spread of weapons of mass destruction include: 

• Sanctions: U.S. laws such as the Chemical and Biological Weapons Control and 

Warfare Elimination Act of 1991 (Pub. L. 102-182, Title III, Dec. 4, 1991, 105 

Stat. 1245), the Iran-Iraq Arms Non-Proliferation Act of 1992 (Pub. L. 102-484) 

(Title XVI), the Iran Nonproliferation Act of 2000 (Pub. L. 106-178), the Iran 

Nonproliferation Amendments Act of 2005 (Pub. L. 109-112), and the North 

Korea Nonproliferation Act of 2006 (Pub. L. 109-353) provide for the imposition 

of sanctions on foreign entities and countries for certain kinds of chemical and 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 6 Toxic Chemicals, Chemical Precursors, and Associated Equipment, Technology, and Software 

71 

biological weapons-related activity. The U.S. Government has imposed sanctions 

under these authorities on certain entities for chemical weapons-related activities. 

• Universality of the CWC: As another tool for stemming the proliferation of 

chemical weapons, the CWC imposes a global ban on the development, 

production, stockpiling, retention, and use of chemical weapons. The CWC also 

prohibits the direct or indirect transfer of chemical weapons, restricts trade in 

certain chemicals to States not Party to the CWC and has created an international 

organization to monitor the destruction of chemical weapons and the production, 

use, and trade of toxic chemicals and chemical precursors in and among States 

Party to the CWC. 

As part of its CWC implementation activities, the Department of Commerce also collects 

industry reports regarding the production, processing, consumption, import, and export of 

toxic chemicals and chemical precursors for purposes not prohibited by the CWC (e.g., 

industrial, agricultural, and other peaceful purposes), which are forwarded to the 

Organization for the Prohibition of Chemical Weapons (OPCW). The Department of 

Commerce also escorts inspectors from the OPCW as they inspect certain U.S. chemical 

facilities to verify that activities are consistent with the information provided in the 

industry reports and with other treaty provisions. 

F. Foreign Availability

Past reviews conducted by the Department of Commerce revealed that a wide range of 

AG chemical precursors and production equipment were available from non-AG 

countries. Non-AG suppliers of precursors and/or related production equipment include 

Brazil, Chile, Colombia, India, Mexico, China (PRC), South Africa, the countries of the 

former Soviet Union, Taiwan, and Thailand. However, most have become States Party to 

the CWC and will take steps under this treaty to prevent chemical weapons development 

and production. As such, the U.S. Government has made efforts through its membership 

in both the AG and CWC to secure the cooperation of foreign governments to control the 

foreign availability of chemical precursors and production equipment.

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

CHAPTER 7 

Biological Agents and Associated Equipment and Technology 

(Sections 742.2, 744.4 and 744.6)9

Export Control Program Description and Licensing Policy

The U.S. Government controls the export of certain microorganisms, toxins, biological 

equipment, and related technology to further U.S. foreign policy interests in opposing the 

proliferation and use of biological weapons. The U.S. Government implements these 

export controls multilaterally in coordination with the Australia Group (AG), a forum of 

40 nations and the European Commission cooperating to halt the proliferation of 

chemical and biological weapons. The U.S. Government also supports international 

efforts to secure a total ban on biological weapons in compliance with the Convention on 

the Prohibition of the Development, Production and Stockpiling of Bacteriological 

(Biological) and Toxin Weapons and on Their Destruction (BWC). 10 

Australia Group Controls

The AG was formed in 1985 when the United States and 14 other nations agreed on the 

need to enhance cooperation and harmonize national licensing measures on a number of 

chemical agents that could be used to produce chemical weapons. Since then, the AG has 

expanded its membership and has expanded its export control list to cover various 

chemical and biological weapons-related items. AG member countries use the AG 

control list and guidelines as a basis for developing and imposing their national export 

controls. The AG has a no-undercut policy, requiring consultation with a partner that has 

previously denied an AG-controlled export pursuant to AG guidelines, if the transaction 

is essentially identical. 

Licensing Requirements and Licensing Policy

The licensing requirements for biological agents, related equipment, and technology, 

imposed in accordance with AG commitments are noted below. There are 12 entries on 

the Commerce Control List (CCL) that are subject to biological controls. 

 

9 Chapter 6 of this report addresses U.S. chemical controls. 

10 The Convention on the Prohibition of the Development, Production and Stockpiling of 

Bacteriological (Biological) and Toxin Weapons and on Their Destruction (BWC) was 

signed in 1972 and ratified by the United States in 1975.

72 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

A. The U.S. Government requires a license for the export to all destinations of 

certain human pathogens, zoonoses, toxins, animal pathogens, genetically modified 

microorganisms and plant pathogens, and the technology for their production and/or 

disposal. 

The U.S. Government also requires a license for the export to specified countries of 

certain dual-use equipment and materials that can be used to produce biological agents 

and related production technology. The countries for which this licensing requirement 

applies are those indicated in Column CB2 of the Commerce Country Chart, Supplement 

No. 1 to Part 738 of the Export Administration Regulations (EAR), as well as the 

embargoed destinations identified in EAR Part 746. 

The U.S. Government also controls items subject to the EAR because of biological enduse or end-user concerns. These controls are part of the Enhanced Proliferation Control 

Initiative (EPCI), announced by President George H. W. Bush on December 13, 1990. 

• The U.S. Government requires a license for the export of any commodity, 

technology, or software when the exporter knows that it will be used in the 

design, development, production, stockpiling, or use of biological weapons in, or 

by, any country anywhere in the world, including AG member countries. In 

addition, the U.S. Government may inform an exporter or reexporter that a license 

is required due to an unacceptable risk that the items will be used in, or diverted 

to, biological weapons proliferation activities anywhere in the world. 

• No U.S. person may knowingly support such an export, reexport, or transfer 

without a license. “Support” is defined as any action, including financing, 

transportation, or freight forwarding that facilitates the export, reexport, or 

transfer of these items. 

• In addition, no U.S. person may perform, without a license, any contract, service, 

or employment knowing that it will directly assist the design, development, 

production, stockpiling, or use of biological weapons in, or by, any destination or 

country anywhere in the world. 

B. The Department of Commerce, in coordination with the Departments of Defense, 

Energy, and State, reviews applications for licenses on a case-by-case basis to determine 

whether the export would make a material contribution to the design, development, 

production, stockpiling, or use of biological weapons. When the Department of 

Commerce determines as a result of an interagency review that an export will make such 

a contribution, it will deny the application. 

Summary of 2007 Changes 

On September 12, 2007, the Department of Commerce published a rule in the Federal 

Register (72 FR 52000) to conform our regulations to agreements reached at the June, 

2007 Australia Group plenary. The Department narrowed the scope of our regulations 

73 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

controlling mycoplasma mycoides to apply to only specific subspecies and strains of the 

bacteria and updated a Technical Note to reference the current edition of the World 

Health Organization (WHO) “Laboratory Biosafety Manual” (i.e., 3rd edition, Geneva, 

2004). 

Analysis of Controls as Required by Section 6(f) of the Act

A. The Purpose of the Controls

The controls described above are intended to prevent a U.S. contribution to the 

proliferation and illegal use of biological weapons, and to support multilaterally 

coordinated control efforts. The controls also provide the regulatory authority to stop the 

export of any item from the United States when there is a significant risk that it will be 

used for biological weapons purposes. The controls implement certain measures directed 

in Executive Order 12735 of November 16, 1990, its successor, Executive Order 12938 

of November 14, 1994, and the Enhanced Proliferation Control Initiative (EPCI) 

announced on December 13, 1990. 

The U.S. Government implements these controls in coordination with the AG. The AG 

works to accomplish multilateral objectives through harmonizing export controls, 

exchanging information, and other diplomatic means. In addition, these EAR controls 

demonstrate the commitment of the United States to its obligation under the BWC not to 

develop, produce, stockpile, acquire, or retain biological agents, weapons, equipment, or 

the means of delivery for warfare purposes, or to assist others in such activities. The 

controls also advance the goals of the 1925 Geneva Protocol for the Prohibition of the 

Use in War of Asphyxiating, Poisonous or other Gases and of Bacteriological Methods of 

Warfare (Geneva Protocol). 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including availability of relevant items from other 

countries, and that the foreign policy purpose cannot fully be achieved through 

negotiations with its partners in the AG and in the BWC. The Secretary has made this 

determination despite the existence of certain factors, including availability of these items 

from other sources, which challenge the full achievement of foreign policy goals. These 

controls affirm U.S. opposition to the development, proliferation, and use of biological 

weapons and serve to distance the United States from such activities. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and that the extension 

of these controls will not have any significant adverse foreign policy consequences. The 

U.S. Government has a strong interest in remaining at the forefront of international 

74 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

efforts to stem the proliferation of biological weapons. Also, these controls are 

compatible with the multilateral export controls for biological materials agreed to by the 

AG. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counterproductive to U.S. foreign policy interests. 

The U.S. Government continues to discuss biological export controls with countries 

outside of the AG to advance the goals of nonproliferation. 

4. Economic Impact on U.S. Industry. The Secretary has determined that any 

adverse effect of these controls on the economy of the United States, including on the 

competitive position of the United States in the international economy, does not exceed 

the benefit to United States foreign policy objectives.

In Fiscal Year 2007, the Department of Commerce approved 1,355 license applications, 

valued at $65,165,616, for the export or reexport of biological agents and equipment. 

The vast majority of the licenses approved were for toxins in ECCN 1C351. The 

Department of Commerce denied 2 license applications for biological agents/equipment 

valued at $144,300, and returned without action 64 license applications valued at 

$5,850,373. The primary reason cited for returning applications was for insufficient 

information about the transaction. 

5. Effective Enforcement of Controls. The Secretary has determined the United 

States has the ability to enforce these controls effectively. Enforcing controls on 

biological weapons-related materials poses problems similar to the enforcement of 

chemical controls, but with additional difficulties. Biological materials are microscopic 

organisms that require technical expertise and specialized facilities to identify and to 

handle. Because of their size, biological agents can often be concealed and transported 

with ease. 

To meet the challenge of effective enforcement of these proliferation controls, the 

Department of Commerce has focused resources toward preventive enforcement. 

Commerce personnel conduct an extensive, ongoing outreach program to educate 

industry about export controls. The program also is designed to increase industry’s 

awareness of suspect orders for products or equipment that could be used for biological 

weapons proliferation. In cases where unlicensed shipments of biological materials have 

already taken place, the Department of Commerce has found that, as in other export 

control enforcement cases, analysis of commercial shipping documentation can lead to 

successful investigations and prosecutions. 

75 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

C. Consultation with Industry

Exporters of biological products include commercial firms as well as academic and 

government entities. The Department of Commerce maintains ongoing interaction with 

individual exporters, Technical Advisory Committees (TACs), and trade associations to 

discuss proposed export transactions and marketing plans to facilitate the thorough, yet 

prompt, review of export license applications. Through the TACs, the Department keeps 

industry representatives abreast of licensing proposals for items on the control list and 

gives them the opportunity to provide technical input. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

Recognizing that multilateral coordination of export controls and enforcement actions is 

the most effective means of restricting proliferation activities, the U.S. Government 

coordinates its controls on biological items with other countries in the AG. 

The U.S. Government continues to address the problem of biological weapons 

proliferation through a variety of international fora and urges other AG members to 

pursue export control cooperation with non-members on a bilateral or regional basis. 

E. Alternative Means

The U.S. Government continues to address the problem of biological weapons 

proliferation on a number of fronts. Direct negotiations with countries intent on 

acquiring biological weapons are not likely to prevent the use of U.S.-origin materials for 

such activities and such negotiations are unlikely to affect the behavior of these countries. 

Alternative means to curtail the acquisition and development of biological warfare 

capabilities, such as diplomatic negotiations, do not obviate the need for controls. The 

following examples demonstrate additional means that have been, and will continue to 

be, used in an attempt to curb the use and spread of weapons of mass destruction: 

• Regulations issued by the Public Health Service (42 CFR Part 72) pursuant to 

“The Antiterrorism and Effective Death Penalty Act of 1996” (Sec. 511 of Pub. 

L.104-132, April 24, 1996, 110 Stat. 1214) place additional shipping and handling 

requirements on laboratory facilities that transfer or receive select infectious 

agents capable of causing substantial harm to human health. 

76 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 7 Biological Agents and Associated Equipment and Technology 

• The Chemical and Biological Weapons Control and Warfare Elimination Act of 

1991 (Pub. L.102-182, Title III, December 4, 1991, 105 Stat. 1245), the Iran-Iraq 

Arms Non-Proliferation Act of 1992 (Pub. L. 102-484) (Title XVI), the Iran 

Nonproliferation Act of 2000 (Pub. L. 106-178), the Iran Nonproliferation 

Amendments Act of 2005 (Pub. L. 109-112), and the North Korea 

Nonproliferation Act of 2006 (Pub. L. 109-353) provide for the imposition of 

sanctions on foreign persons or countries for certain kinds of chemical and 

biological weapons-related activity. The U.S. Government has imposed sanctions 

under these authorities on certain entities for chemical and biological weaponsrelated activities. 

The negotiations and alternative means undertaken by the U.S. Government demonstrate 

that it has made reasonable efforts to achieve the purposes of the controls; however, these 

actions have not had results that are as effective as the maintenance and renewal of the 

controls. 

F. Foreign Availability

Most of the AG-controlled biological agents, and related equipment to produce them, are 

available from many sources (biological agents are, in fact, endemic). Notwithstanding 

the difficulties related to effectively controlling these items, the United States and its AG 

partners consider it necessary to maintain controls in order to stem shipments to potential 

weapons developers. Foreign availability is a factor considered by the AG member 

countries in their coordination of controls.

77 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

CHAPTER 8 

Missile Technology Controls 

(Sections 742.5 and 744.3)

Export Control Program Description and Licensing Policy

The U.S. Government maintains export controls on certain equipment, materials, 

software, and technology to further U.S. foreign policy, which opposes the proliferation 

of missiles capable of delivering weapons of mass destruction (WMD). The U.S. 

Government implements these controls in coordination with the members of the Missile 

Technology Control Regime (MTCR), an informal forum of 34 nations that cooperate to 

halt the proliferation of such missiles. (See Appendix II for a complete list of MTCR 

members.) Of note, several other countries, including Israel, Romania, and Slovakia, 

unilaterally adhere to the MTCR Guidelines. 

 

Missile Technology Control Regime Controls 

On April 16, 1987, the United States, Canada, France, Germany, Italy, Japan, and the 

United Kingdom created the MTCR to limit the proliferation of missiles capable of 

delivering nuclear weapons. Member countries agreed to further expand the MTCR 

controls in 1993 to include missile delivery systems for all types of WMD. The MTCR 

Equipment, Software, and Technolgy Annex is the list of missile-related items to be 

controlled pursuant to the MTCR Guidelines, and is divided into two categories. 

Category I items include missile systems and major subsystems, production facilities, and 

production equipment for missile systems capable of delivering at least a 500 kilogram 

(kg) payload to at least a 300 kilometer (km) range. Category II items include materials, 

components, and production and test equipment associated with Category I items, as well 

as missile subsystems, production facilities, and production equipment for missile 

systems with a range equal to or greater than 300 km, regardless of payload. 

 

Licensing Requirements and Licensing Policy for MTCR Controls 

 

The Department of Commerce is responsible for administering controls on manufacturing 

equipment for Category I items, and all dual-use items in Category II. The MTCR 

Guidelines and the Equipment, Software, and Technology Annex form the basis for U.S. 

missile technology controls. The MTCR Guidelines provide licensing policy, 

procedures, review factors, and standard assurances on missile technology exports. 

There are approximately 120 entries on the Commerce Control List (CCL) that are 

subject to missile technology controls. Category I items are subject to a strong 

presumption of denial regardless of purpose, and the transfer of production facilities for 

Category I items is prohibited. The Department will approve the export of Category II 

items only after a case-by-case review consistent with U.S. law, policy, regulations, and 

78 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

international non-proliferation commitments. The United States observes the multilateral 

commitment to honor the denial of licenses by other members and to support such denials 

through a “no undercut” policy. This policy enhances efforts to prevent missile 

proliferation and prevents unfair commercial advantage among regime members. 

Licensing Requirements and Licensing Policy

In summary, the licensing requirements and policy for missile technology controls 

described in Sections 742.5 and 744.3 of the Export Administration Regulations (EAR) 

are as follows: 

A. The U.S. Government requires a license for the export or reexport to all 

destinations except Canada of those dual-use items specifically identified on the CCL as 

controlled for missile technology reasons. 

B. The U.S. Government also controls items subject to the EAR due to end-use or 

end-user concerns related to the proliferation of certain rocket systems and unmanned air 

vehicles, including missile systems. These controls are part of the Enhanced Proliferation 

Control Initiative (EPCI), announced by President George H. W. Bush on December 13, 

1990. The U.S. missile catch-all policy meets U.S. nonproliferation objectives and is 

consistent with the MTCR Guidelines. The Department of Commerce reviews 

applications for licenses on a case-by-case basis to determine whether the export would 

make a material contribution to the proliferation of certain rocket systems, or unmanned 

air vehicles. When the Department of Commerce determines that an export will make 

such a contribution, the Department will deny the application. 

Summary of 2007 Changes: 

On May 7, 2007, the Department published in the Federal Register an amendment to the 

EAR to implement changes to the MTCR Annex that member countries agreed to at the 

October 2006 Plenary in Copenhagen, Denmark (72 FR 25680). The amendment 

clarified the control parameters on several dual-use items to make clear that the items 

were controlled when used in rockets, missiles, and unmanned aerial vehicles capable of 

a range of at least 300 kilometers, regardless of the payload. The amendment also added 

a new Export Control Classification Number (ECCN) -- 7A107 -- to control three axis 

magnetic heading sensors designed or modified to be integrated with flight control and 

navigation systems. 

Analysis of Controls as Required by Section 6(f) of the Act

A. The Purpose of the Controls

These controls curtail the availability of goods and technology and other support that 

could contribute to missile proliferation. U.S. export controls on specific types of 

79 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

missile-related equipment and technology, in coordination with other supplier countries, 

limit the proliferation of missile systems and related technology. These controls 

complement U.S. and international nuclear, chemical, and biological nonproliferation 

efforts by blocking the development of unmanned delivery systems for WMD. These 

controls provide U.S. support to the collective effort of the MTCR to address mounting 

international concern regarding missile proliferation. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including the limited foreign availability of these MTcontrolled items, and that the foreign policy purpose cannot fully be achieved through 

negotiations or other alternative means. The controls at issue have been in part achieved 

through international or multilateral negotiations. Although some controlled items are 

available from other countries, cooperation among the United States, its MTCR Partners, 

and other like-minded countries, many of which are major producers of the items under 

control, has hindered the efforts of proliferators to develop or acquire militarily effective 

missiles. The Secretary has determined that extending these controls is likely to limit the 

spread of missile delivery systems. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives and that the extension 

of these controls will not have any significant adverse foreign policy consequences. 

Halting the spread of missiles and related equipment and technology worldwide is a key 

U.S. national security and nonproliferation objective. Missile technology export controls 

are consistent with, and contribute to, achieving this objective. U.S. membership in the 

MTCR complements existing nuclear, chemical, and biological nonproliferation policies 

by curbing the spread of missile technology and equipment for the delivery of WMD. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to these controls is not likely to render the controls ineffective, nor will any 

adverse reaction by other countries be counter-productive to U.S. foreign policy interests. 

The United States is confident that other members of and unilateral adherents to the 

MTCR, many of which are also the leading suppliers of missile-related technology, will 

continue to support and strengthen this control regime. MTCR Partners share 

information regarding denials of Annex items and are committed to a “no undercut 

policy.” MTCR Partners also share information about potential activities of proliferation 

concern and have cooperated to interdict specific shipments of proliferation concern. The 

number of MTCR members and other countries willing to cooperate with the regime has 

increased over the past few years. Finally, the United States and its MTCR Partners are 

actively engaged in an outreach program to encourage additional countries to adhere to 

the Guidelines and implement effective export controls on MTCR items. 

80 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

4. Economic Impact on U.S. Industry. The Secretary has determined that any 

adverse effect of these controls on the U.S. economy, including on the competitive 

position of the United States in the international economy, does not exceed the benefits to 

U.S. foreign policy objectives. Only a narrow list of items is subject to missile controls, 

and the effect on overall U.S. trade is limited. The commitment by MTCR to a “no 

undercut policy” helps ensure that no member obtains an unfair commercial advantage in 

the international marketplace. 

In Fiscal Year 2007, the Department of Commerce approved 905 applications, valued at 

$1.8 billion dollars, for the export or reexport of missile-technology controlled items. In 

addition, the Department rejected 6 applications valued at $5.7 million and returned 

without action 47 applications valued at $42.5 million. Comparatively few licenses for 

missile technology items are denied because: (1) exporters do not generally pursue 

transactions they understand will be rejected (based on the applicable licensing policy); 

and (2) most of the applications involve exports to countries, and for end-uses, that do not 

pose missile proliferation concerns. Under the missile EPCI control, the Department 

approved 44 applications, valued at $7.1 million. Additionally, the Department denied 24 

licenses valued at $3.5 million, and returned without action 37 applications, valued at 

$2.9 million. 

5. Effective Enforcement of Controls. The Secretary has determined the United 

States has the ability to effectively enforce these controls. Multilateral controls on 

missile technology provide a strong framework for cooperative enforcement efforts 

overseas. However, there are challenges for the enforcement of controls on dual-use 

goods related to missile development. First, it is difficult to detect and investigate cases 

under the “knowledge” standard set by the EPCI “catch-all” provision. Second, some 

countries have different standards for “catch-all,” which complicates law enforcement 

cooperation. Third, identifying illegal exports and reexports of missile-related goods 

requires significant investigative resources. 

To enforce these controls effectively, the Department of Commerce continues to focus on 

preventive enforcement, including an outreach program to educate companies about 

export controls and to increase awareness of “red flags” that may indicate a risky 

transaction. This program is an important component of the Department of Commerce’s 

efforts to prevent companies from illegally exporting dual-use products or equipment that 

could be used to make missiles. Recognizing the importance of export enforcement, the 

MTCR held its seventh Enforcement Experts meeting at the MTCR Plenary in Athens, 

Greece, in November 2007. 

Among other enforcement activities, the Department of Commerce ensured that penalties 

were assessed against a number of individuals who committed acts in violation of U.S. 

missile-technology export controls. For example, on October 4, 2006, William Kovacs, 

president of Elatec Technology Corporation, was sentenced to 12 months and one day 

imprisonment, three years supervised release, and 300 hours community service in 

81 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

connection with the export of an industrial furnace to a proliferation entity of concern in 

China. On May 28, 2004, Kovacs and Elatec pled guilty to charges that they conspired to 

violate U.S. export licensing requirements in connection with this export. Elatec’s export 

license application for this transaction had previously been denied by BIS due to missile 

technology concerns. An associate, Stephen Midgley, separately pled guilty on January 

10, 2005, to falsely stating in export documents that the furnace did not require an export 

license when the goods were shipped to China. Midgley was sentenced to one year 

probation, 120 hours community service, and a $1,500 criminal fine. BIS assessed 

Midgley a $5,000 ($4,000 suspended) administrative penalty as part of an agreement with 

Midgley to settle charges related to this unlicensed export. OEE and ICE jointly 

conducted this investigation. 

C. Consultation with Industry

The Department of Commerce holds discussions with industry representatives on issues 

related to the MTCR Annex through the Transportation Technical Advisory Committee 

(TransTAC), and other relevant TACs as appropriate. 

Further, the Department of Commerce participates in interagency working groups that 

review proposed changes to the Annex, and engages in discussions of the proposals with 

companies that have relevant expertise. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

Consultation with other MTCR members is a fundamental element of U.S. missile 

technology control policy. Consultations with non-MTCR countries also are essential to 

U.S. missile nonproliferation policy. The U.S. Government shares information about 

activities of concern with other countries and seeks to prevent or stop certain transactions 

of missile proliferation concern. The United States also shares denial information with its 

MTCR partners, who honor the “no-undercut” commitment. 

MTCR member countries seek to foster the cooperation of non-member countries in 

limiting the spread of delivery systems for WMD, and have focused such efforts in a 

MTCR-sponsored series of workshops and seminars. This effort – begun in 1996 – 

allows MTCR members and invited non-members to explore different approaches to 

improve export controls and prevent missile proliferation. 

82 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 8 Missile Technology Controls 

E. Alternative Means

The missile sanction provisions in Section 73 of the Arms Export Control Act, and 

Section 11B of the Export Administration Act, provide for the imposition of export, 

import, and procurement sanctions on foreign entities engaged in certain kinds of 

activities relating to the transfer of MTCR Annex items to non-MTCR adherent 

countries. In the past, the United States has imposed missile sanctions on entities in 

Egypt, India, Iran, Macedonia, Moldova, North Korea, Pakistan, China, Russia, South 

Africa, and Syria. Missile sanctions are used to encourage the governments of the 

sanctioned entities to adopt responsible nonproliferation behavior and to send a clear 

message about the United States’ strong commitment to missile nonproliferation. 

The United States and its MTCR Partners are continuing their diplomatic efforts to 

encourage additional countries to adhere unilaterally to the MTCR Guidelines. Such 

efforts are aimed at encouraging non-MTCR members to implement and enforce 

effective missile technology export controls. Although the United States has an 

obligation to maintain and renew its export controls based on its membership in the 

MTCR, it also has pursued alternative means to achieve the purposes of the controls 

through its consultations with non-MTCR countries. 

F. Foreign Availability

Possible suppliers of missile technology that are not MTCR members include, but are not 

limited to, China, North Korea, Egypt, India, Israel, and Taiwan. Some of these 

countries, such as Israel, adhere unilaterally to the MTCR Guidelines and apply MTCRtype controls. The United States continues to approach other nations that produce MTCR 

Annex-controlled items to secure their cooperation in controlling the foreign availability 

of these items and to urge their vigilance in applying MTCR Guidelines to help prevent 

missile proliferation. The U.S. Government has imposed sanctions on entities in a 

number of countries when those entities have not altered their proliferation behavior.

83 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 9 Encryption 

CHAPTER 9 

Encryption 

(Section 742.15)

Export Control Program Description and Licensing Policy 

Maintaining the secrecy of information is the fundamental function of encryption items. 

Persons abroad may use such items to harm U.S. law enforcement efforts, as well as U.S. 

foreign policy and national security interests. The U.S. Government has a critical interest 

in ensuring that persons opposed to the United States are not able to conceal hostile or 

criminal activities, and that the legitimate needs for protecting important and sensitive 

information of the public and private sectors are met. 

For this reason, when dual-use encryption items were transferred from the United States 

Munitions List to the Commerce Control List (CCL) on December 6, 1996, a foreign 

policy reason for control, Encryption Item (EI), was imposed on these items. A license is 

required to export or reexport EI –controlled items (classified under Export Control 

Classification Numbers (ECCNs) 5A002, 5B002, 5D002 and 5E002 on the CCL) to all 

destinations except Canada. All items controlled for EI reasons are also controlled for 

National Security (NS) reasons. 

Licensing Requirements and Licensing Policy for Encryption Controls 

Most EI-controlled items are eligible for export and reexport to non-government end 

users under the terms and conditions of License Exception ENC after review by BIS and 

the National Security Agency, and many items are also eligible for export and re-export 

to government end users under this License Exception. License applications to export or 

reexport EI-controlled items to governments, or to Internet and telecommunications 

service providers for the provision of services specific to governments, are favorably 

considered for civil uses. EI-controlled items are also eligible for Encryption Licensing 

Arrangements (ELAs), which authorize exports and reexports of unlimited quantities of 

encryption items to certain end users and/or destinations. 

Analysis of Controls as Required by Section 6(f) of the Act 

A. The Purpose of the Controls

Encryption products can be used to conceal the communications of terrorists, drug 

smugglers, and others intent on harming U.S. interests. Cryptographic products and 

software also have military and intelligence applications that, in the hands of hostile 

nations, could pose a threat to U.S. national security. The national security, foreign 

policy, and law enforcement interests of the United States are protected by encryption 

84 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 9 Encryption 

export controls. These controls are consistent with Executive Order (E.O.) 13026, which 

was issued on November 15, 1996, and the Presidential Memorandum of the same date. 

 

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that, consistent with E.O. 13026 of November 15, 1996, and the 

Presidential Memorandum of the same date, the updated U.S. encryption export controls 

achieve the intended purpose of implementing technical review procedures for 

commercial encryption items and restricting the export of encryption items in situations 

that would be contrary to U.S. national security or foreign policy interests. The Secretary 

has determined that these controls are likely to achieve the intended foreign policy 

purpose, in light of other factors, including the availability of encryption items from other 

countries, and that the foreign policy purpose cannot fully be achieved through 

negotiations with the participating states of the Wassenaar Arrangement (WA) or through 

alternative means. This determination, however will continue to be reviewed as the 

electronic commerce industry and the Internet grow, new security protocols emerge for 

short-range wireless communications, among other things, and the number of countries 

with the technology to produce highly sophisticated, dual-use encryption products 

continues to expand. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

these controls are compatible with U.S. foreign policy objectives, and that the extension 

of these controls will not have significant adverse foreign policy consequences. The 

controls are consistent with the U.S. foreign policy goal of preventing U.S. exports (and 

subsequent reexports) that might contribute to destabilizing military capabilities or to the 

capabilities of international terrorists or criminals. 

3. Reaction of Other Countries. The Secretary has determined that the continued 

implementation of U.S. encryption export controls is generally accepted in the 

international community, and that any adverse reaction to these controls is not likely to 

render the controls ineffective, nor are they counter-productive to the foreign policy 

interests of the United States. Other countries, particularly those capable of producing 

highly sophisticated encryption products, recognize the need to control exports of such 

products for national security and law enforcement reasons. The U.S. Government and 

its key trading and security partners recognize the desirability of securing critical 

infrastructures, developing new technologies and standards, preventing cybercrime, and 

promoting electronic commerce, while restricting goods that could compromise national 

security and foreign policy interests. 

4. Economic Impact on U.S. Industry. The Secretary has determined that the 

continued implementation of encryption regulations will allow U.S. industry to maintain 

a leadership position in the global market for encryption as well as other IT products, 

while ensuring that essential protections for U.S. national security and foreign policy 

interests, as well as the public safety, are upheld. The Secretary has determined that any 

adverse effect of these controls on the U.S. economy, including on the competitive 

85 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 9 Encryption 

position of the United States in the international economy, does not exceed the benefit to 

U.S. foreign policy objectives. 

Except for a limited range of encryption items (such as high-end “network infrastructure” 

products, commercial encryption source code items, and products for which the 

cryptography has been customized or tailored for government end-users or end-uses) for 

which a license is required to certain government end-users outside the EU “license-free 

zone,” dual-use encryption products may be exported and reexported to any destination 

outside Country Group E:1 after a one-time technical review has been conducted 

pursuant to either the License Exception ENC (15 C.F.R. § 740.17) or the “mass market” 

encryption provisions of the Export Administration Regulations (EAR) (15 C.F.R. § 

742.15(b)(2)). 

Throughout Fiscal Year 2007, the Department of Commerce processed a substantial 

number of pre-export encryption review requests for a variety of products with 

encryption features. This activity continues to reflect the ever-expanding trade in 

encryption items, and the wide commercial applicability of such items. The Department 

processed 2,697 review requests, including 538 mass market review requests, for 

controlled encryption products, components, toolkits, and source code items. Types of 

products reviewed include commodities and software for desktop and laptop computers, 

wireless handheld devices, e-business applications, network security, and 

telecommunications platforms. These encryption reviews comprised 48 percent of the 

5,552 commodity classifications conducted by the Department in Fiscal Year 2007. 

Additionally, during Fiscal Year 2007, the Department approved 1,311 license 

applications for “restricted” encryption items (such as high-end routers and other network 

infrastructure equipment) and technology (excluding so-called “deemed exports” that are 

eligible for release under License Exception ENC to most foreign national employees 

who are present in the United States). These licenses for “restricted encryption items” 

were destined to non-sanctioned end-users outside Country Group E:1 for which licenses 

were required. In Fiscal Year 2007, there were no denials of encryption commodities 

based on issues specific to encryption policy. 

5. Effective Enforcement of Controls. The Secretary has determined the United 

States has the ability to enforce these controls effectively. Detection of some encryption 

transactions is difficult because encryption components are often incorporated into other 

products and encryption software can be transferred over the Internet. 

Among other enforcement activities, the Department of Commerce ensured that penalties 

were assessed against a number of individuals who committed acts in violation of U.S. 

missile-technology export controls. For example, on September 18, 2006, SuperMicro 

Computer, Inc., pled guilty to illegally exporting motherboards controlled for National 

Security reasons to Iran and was sentenced to a criminal fine of $150,000. SuperMicro 

also agreed to pay an administrative fine of $125,400 to settle charges for related 

86 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 9 Encryption 

transactions with the BIS. On April 13, 2007, a SuperMicro Computer employee agreed 

to pay an administrative for of $60,000 to settle charges for related transactions with BIS. 

C. Consultation with Industry

The U.S. Government continually consults with U.S. industry regarding encryption 

policy. The objective of these consultations is to develop updated policy solutions to 

assist law enforcement, protect U.S. national security, ensure continued U.S. 

technological leadership, and promote the privacy and security of U.S. firms and citizens 

engaged in electronic commerce in an increasingly networked world. Such consultations 

have proven successful, as evidenced by the increasing number of encryption items 

submitted for technical review and constructive industry input on matters of regulations 

and policy. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policybased export controls. In addition, comments were solicited from the public via the BIS 

website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

The U.S. Government has taken the lead in global efforts to prevent international 

criminals, terrorists, and designated state sponsors of terrorism from acquiring 

sophisticated encryption products, and urged other supplier nations to adopt export 

controls comparable to those of the United States. As a result, the major industrial 

partners of the U.S. Government maintain export controls on encryption equipment and 

technology. U.S. encryption policy reflects continual consultation with other nations, 

such as the participating states of the Wassenaar Arrangement, members of the European 

Union, and key bilateral strategic partners. 

Encryption items are included under the Wassenaar Arrangement’s Basic List of dual-use 

goods and technologies, with controls based on the encryption strength (e.g., key length) 

and use of specified dual-use items. In addition, the Wassenaar Arrangement’s 

Cryptography Note provides for release from national security controls “mass market” 

encryption items otherwise covered by the Wassenaar control list. 

E. Alternative Means

Through a wide range of diplomatic cooperation with law enforcement officials in 

friendly countries, the U.S. Government continues to undertake bilateral and multilateral 

efforts to keep encryption products out of the hands of terrorists and other criminals. The 

87 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 9 Encryption 

U.S. Government continues to encourage other nations to adopt appropriate restrictions 

on the export of encryption products. The progress of these efforts supplements, but does 

not supplant, the effectiveness of U.S. encryption export controls. 

F. Foreign Availability

The United States recognizes the ongoing adoption and widespread use of encryption 

world wide, and the continued development of foreign-made encryption hardware and 

software. The U.S. Government continues to monitor global IT marketplace and 

encryption policy developments so that updated U.S. regulations will enable American 

companies to maintain their technological leadership in a manner that safeguards U.S. 

national security and public safety interests. The U.S. Government does consult with 

other governments to secure cooperation in controlling the unfettered availability of 

encryption items. 

88 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 10 Significant Items: “Hot Section” Technology 

CHAPTER 10 

Significant Items: “Hot Section” Technology 

(Section 742.14)

Export Control Program Description and Licensing Policy

Certain technology transferred from the United States Munitions List to the Commerce 

Control List (CCL) is subject to “enhanced control.” This technology is designated on 

the CCL by the acronym “SI,” which stands for “Significant Items.” The technology 

controlled for SI reasons is “hot section” technology for the development, production, or 

overhaul of commercial aircraft engines, components, and systems. Technology 

controlled for “significant items” reasons is classified under various paragraphs of Export 

Control Classification Number (ECCN) 9E003 on the CCL (specifically, SI controls 

apply to ECCN 9E003.a.1 through a.11, and 9E003.h.). All technology controlled for 

“significant items” reasons is also controlled for “national security” reasons. 

License Requirements and Licensing Policy for Significant Items 

The licensing policy for “hot section” technology is as follows: 

• A license is required for exports and reexports to all destinations, except Canada, 

for “hot section” technology. 

• The United States reviews license applications for “hot section” technology on a 

case-by-case basis to determine whether the proposed export or reexport is 

consistent with national security and foreign policy interests. 

Analysis of Control as Required by Section 6(f) of the Act

A. The Purpose of the Control

This control provides a mechanism for the United States to monitor closely the export of 

this technology to prevent its use in a manner that would adversely affect U.S. 

nonproliferation goals or the military balance within a region. 

B. Considerations and/or Determinations of the Secretary of Commerce

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that this control is likely to achieve the intended foreign policy purpose, 

notwithstanding various factors, including the availability of these SI-controlled items 

from other countries, and that the foreign policy purpose has only been partially achieved 

through negotiations on export controls with the participating states of the Wassenaar 

Arrangement. 

89 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 10 Significant Items: “Hot Section” Technology 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

this control is compatible with U.S. foreign policy objectives, and that the extension of 

this control will not have any significant adverse foreign policy consequences. The 

control is consistent with U.S. foreign policy goals to promote peace and stability and to 

prevent U.S. exports that would contribute to inappropriate military capabilities abroad. 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to this control is not likely to render the control ineffective, nor will any adverse 

reaction by other countries be counter-productive to U.S. foreign policy interests. “Hot 

section” technology for commercial jet engines is subject to dual-use export controls by 

other allied countries. These countries also recognize the desirability of restricting goods 

that could compromise shared security and foreign policy interests. 

4. Economic Impact. The Secretary has determined that any adverse effect of this 

control on the economy of the United States, including on the competitive position of the 

United States in the international economy, does not exceed the benefit to U.S. foreign 

policy objectives. In Fiscal Year 2007, the Department of Commerce approved 177 

licenses for technology controlled under ECCN 9E003. Most of the 177 licenses 

approved involved the export of “hot section” technology, but 77 of those involved 

deemed exports (i.e., the transfer of “hot section” technology to foreign nationals who are 

in the United States). The total dollar value of the items subject to the licenses approved 

was $10.1 million in Fiscal Year 2007. There were no rejections of applications 

involving the transfer of engine “hot section” technology in Fiscal Year 2007; however, 

35 applications involving items valued at a total of $5,126 were returned without action.

5. Effective Enforcement of Control. The Secretary has determined that the United 

States has the ability to enforce this control effectively. The U.S. Government does not 

experience any unusual problems in enforcing this control. Manufacturers and 

intermediary companies are familiar with U.S. controls on these products and 

technologies. With the exception of “hot section” technology not covered by ECCN 

9E003.a.1 through 9E003.a.11, which is currently used in civil derivatives of military 

engines controlled on the U.S. Munitions List (ECCN 9E003.h), all of these items also 

are subject to multilateral controls. Therefore, cooperation from foreign government 

enforcement agencies is useful in preventing and punishing violators. 

C. Consultation with Industry 

As needed, the Department of Commerce consults with the Transportation Technical 

Advisory Committee, although there are no major changes anticipated regarding this 

control on the CCL. 

In a September 5, 2007, Federal Register notice (72 FR 50912), the Department of 

Commerce solicited comments from industry on the effectiveness of U.S. foreign policy90 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 10 Significant Items: “Hot Section” Technology 

based export controls. In addition, comments were solicited from the public through the 

BIS website. Comments from the Department’s six Technical Advisory Committees are 

solicited on an ongoing basis and are not specific to this report. The comment period 

closed on October 5, 2007. A detailed review of all public comments received can be 

found in Appendix I. 

D. Consultation with Other Countries

The United States has taken the lead in international efforts to stem the proliferation of 

sensitive items, urging other supplier nations to adopt and apply export controls 

comparable to those of the United States. The major industrial partners of the United 

States maintain export controls on almost all of this equipment and technology and 

control them as dual-use commodities. Pursuant to their agreement to establish a regime 

for the control of conventional arms and sensitive dual-use goods and technologies, the 

participants in the Wassenaar Arrangement have agreed to control these items (with the 

exception of items subject to ECCN 9E003.h noted above, which the United States has 

not sought to control in Wassenaar) and to ensure that transfers of such items are carried 

out responsibly and in furtherance of international peace and security. 

E. Alternative Means

The U.S. Government has undertaken a wide range of diplomatic endeavors, both 

bilateral and multilateral, to encourage proper control over these items, and has been 

successful in reaching multilateral agreement in the Wassenaar Arrangement to control 

most of these items. The United States has specifically encouraged efforts to prevent the 

unauthorized use or diversion of these items to activities contrary to U.S. national 

security and foreign policy concerns. However, these efforts do not replace the continued 

need for the additional control. 

F. Foreign Availability

Although the United States has been the world leader in this technology, other countries 

produce “hot section” technology. Most countries that are producers of “hot section” 

technology are participants in the Wassenaar Arrangement and control these items (with 

the exception of items controlled under ECCN 9E003.h noted above) as dual-use items in 

accordance with their national licensing policies. The commitment of the U.S. 

Government and its Wassenaar partners to maintain controls reflects the cooperation 

among governments to reduce foreign availability. 

91 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 11 Nuclear Nonproliferation 

CHAPTER 11 

Nuclear Nonproliferation 

(Sections 742.3 and 744.2)

Export Control Program Description and Licensing Policy

The U.S. Government maintains controls on exports of nuclear-related items under the 

authority of the Nuclear Nonproliferation Act of 1978 (NNPA) to further the United 

States’ nuclear nonproliferation policy. Although these controls are primarily based on 

the NNPA, and therefore are not subject to this report, BIS has included information on 

the controls because they usually are grouped with other nonproliferation controls 

referenced in this report. Controls based on nuclear end-uses and end-users are 

maintained under the authority of Section 6 of the Export Administration Act (the Act), 

as part of the Enhanced Proliferation Control Initiative (EPCI). EPCI controls are 

described in detail in Chapters 6, 7, and 8 of this report. 

Licensing Requirements and Licensing Policy

The Department of Commerce requires a license for the export of the following items: 

• commodities, related technology, or software that could be of significance for 

nuclear explosive purposes (i.e., the Nuclear Referral List included in the 

Commerce Control List); and 

• any commodity, related technology, or software that the exporter knows, or has 

reason to know, will be used directly or indirectly in any of the following 

activities: 

 – nuclear explosive activities including the design, development, 

manufacture, or testing of nuclear weapons or nuclear explosive devices; 

 – unsafeguarded nuclear activities, including the design, development, or 

manufacture of any nuclear reactor, critical facility, facility for the 

fabrication of nuclear fuel, facility for the conversion of nuclear material 

from one chemical form to another, or separate storage installation where 

there is no obligation to accept International Atomic Energy Agency 

safeguards at the facility or installation, when it contains any source of 

special fissionable material, or where any such obligation is not met; or 

 – safeguarded and unsafeguarded nuclear activities, including the design, 

construction, fabrication, or operation of the following facilities, or 

components for such facilities: (i) facilities for the chemical processing 

of irradiated special nuclear or source materials; (ii) facilities for the 

production of heavy water; (iii) facilities for the separation of isotopes of 

92 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 11 Nuclear Nonproliferation 

source and special nuclear material; or (iv) facilities for the fabrication of 

nuclear reactor fuel containing plutonium. 

The Department of Commerce may inform the exporter that a license is required for any 

item subject to the Export Administration Regulations when there is an unacceptable risk 

of use in or diversion to any of the activities described above. 

Factors considered in reviewing applications for licenses include: 

• the stated end-use of the item, 

• the significance for nuclear purposes of the particular component and its 

availability elsewhere, 

• the types of nuclear nonproliferation assurances or guarantees given in a 

particular case, and 

• the nonproliferation credentials of the recipient country. 

Analysis of Controls as Required by Law11

Section 17(d) of the Export Administration Act and Section 309(c) of the NNPA provide 

that: (1) nuclear nonproliferation controls do not expire annually and determinations to 

extend them are thus not required; and (2) the criteria and other factors set forth in 

Sections 6(b) through 6(f) of the Act are not applicable to these controls. The 

Department of Commerce is, therefore, notifying Congress that these controls continue in 

effect. These controls further the nuclear nonproliferation policy of the United States and 

have made it more difficult for nations to acquire sensitive nuclear technology or 

equipment. 

These controls support U.S. international nuclear nonproliferation obligations. The 

United States is a member of the multilateral Nuclear Suppliers Group (NSG). The NSG, 

which has 45 members, sets forth export control guidelines applicable to a list of nuclearrelated dual use items (see Appendix II for a complete list of regime members). The 

United States also is a member of the Zangger Committee, a multilateral group formed in 

the early 1970s to establish guidelines for the export control provisions of the Nuclear 

Nonproliferation Treaty. The United States regularly consults with non-NSG members to 

coordinate export controls for nuclear nonproliferation purposes as well. 

The Departments of Commerce and Energy, in consultation with the Departments of 

State and Defense and the Nuclear Regulatory Commission, regularly review and revise 

the list of U.S. dual-use items controlled for nuclear nonproliferation reasons. This list is 

referred to as the Nuclear Referral List (NRL), and is used to meet the United States’ 

 

11 The analysis, required by law, differs for nuclear nonproliferation controls. It is governed by the Nuclear 

Nonproliferation Act of 1978 (NNPA). Therefore, the headings under this section differ from the rest of 

the report. 

93 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 11 Nuclear Nonproliferation 

NSG commitments with respect to nuclear dual-use items. During Fiscal Year 2007, 

there were no additions or updates to the NRL.

A number of enforcement actions regarding non-compliance with these controls occurred 

during Fiscal Year 2007. For example: 

Diaphragm Pumps to Taiwan, Singapore, Brazil and Ecuador: On May 4, 2007, 

Yamada America, Inc., an Illinois company, was ordered to pay $220,000 in 

administrative fines to settle charges that the company committed 26 violations of the 

EAR. Between 2001 and 2005, Yamada America exported diaphragm pumps to Taiwan, 

Singapore, Brazil, and Ecuador without the required export license and with knowledge 

that a violation would occur. In addition, Yamada America made false statements on 

export control documents related to the unlicensed exports. 

Nickel Powder to Taiwan: On June 21, 2007, Theresa Chang pled guilty to one count of 

making false statements related to the export of nickel powder controlled for nuclear 

proliferation reasons to Taiwan without an export license. 

Graphite Products to the United Arab Emirates: On July 3, 2007, Spares Global, Inc., 

represented by President and empowered official, Mr. Om Sharma, pled guilty to 

conspiracy to commit several federal violations related to the shipment of graphite 

products to the United Arab Emirates with potential nuclear and military applications. 

Spares Global conspired to falsify documents related to the graphite shipment and then 

attempted to mislead federal investigators when questioned about the shipment and the 

documents. 

The Department of Commerce regularly solicits industry and public comment on these 

controls. In a September 5, 2007, Federal Register notice (72 FR 50912), the 

Department of Commerce solicited comments from industry on the effectiveness of U.S. 

foreign policy-based export controls. In addition, comments were solicited from the 

public via the BIS website. Comments from the Department’s six Technical Advisory 

Committees are solicited on an ongoing basis and are not specific to this report. The 

comment period closed on October 5, 2007. A detailed review of all public comments 

received can be found in Appendix I. 

 

94 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 12 Surreptitious Listening 

CHAPTER 12 

Surreptitious Listening 

(Section 742.13)

Export Control Program Description and Licensing Policy

On November 20, 2006 (71 FR 67034), the Department of Commerce published an 

amendment to the Export Administration Regulations (EAR) to impose foreign policy 

controls on exports of devices primarily used for the surreptitious interception of wire, 

oral, or electronic communications and on related software and technology. The U.S. 

Government maintains these controls in order to prevent the unlawful interception of 

oral, wire, or electronic communications by terrorists and others who may put the 

information gained through intercepted communications to an unlawful use; to promote 

the protection of privacy of oral, wire, or electronic communications; and to protect 

against threats of terrorism around the world. 

The amendment imposed anti-terrorism (AT) controls and created a new foreign policy 

control, surreptitious listening (SL), for devices used for the surreptitious interception of 

wire, oral, or electronic communications controlled under Export Control Classification 

Number (ECCN) 5A980. It also imposed the same controls on related software and 

technology by creating ECCNs 5D980 (software) and 5E980 (technology). 

Licensing Requirements and Licensing Policy

A license is required for the export or reexport, to any destination, of any electronic, 

mechanical, or other device primarily useful for surreptitious interception of wire, oral, or 

electronic communications. The Department will generally approve applications for the 

export and reexport of items classified as 5A980, 5D980 or 5E980, other than to 

destinations for which a license is required for AT reasons, for providers of wire or 

electronic communication service acting in the normal course of business; or officers, 

agents, or employees of, or persons under contract with, the United States, a State, or a 

political subdivision thereof, when engaged in the normal course of government 

activities. License applications from other parties will generally be denied. 

The license requirements set forth in the EAR are independent of the requirements of 

section 2512 of the Omnibus Crime Control and Safe Streets Act of 1968, as amended 

(18 U.S.C. 2512). These controls do not supersede, nor do they implement, construe, or 

limit the scope of any of the statutory restrictions of section 2512 of the Omnibus Crime 

Control and Safe Streets Act of 1968, as amended, that are enforced by the U.S. 

Department of Justice. 

95 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 12 Surreptitious Listening 

Analysis of Control as Required by Section 6(f) of the Act

A. The Purpose of the Control

The purpose of the imposition of surreptitious listening controls is to prevent the 

unlawful interception of oral, wire, or electronic communications by terrorists and others 

who may put the information gained through intercepted communications to an unlawful 

use; to promote the protection of privacy of oral, wire, or electronic communications; and 

to protect against threats of terrorism around the world. The controls distance the United 

States from nations that have repeatedly supported acts of terrorism and from individuals 

and organizations that commit terrorist acts. 

B. Considerations and/or Determinations of the Secretary of Commerce 

1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary 

has determined that the surreptitious listening controls are likely to achieve the intended 

foreign policy purpose, notwithstanding the availability of these controlled items from 

other countries, and that the foreign policy purpose cannot be achieved through 

negotiations or other alternative means. 

Because sending or carrying the devices in foreign commerce is already subject to 

independent criminal sanction, the imposition of foreign policy-based controls on these 

devices and related software and technology will enhance the probability of achieving the 

intended foreign policy purpose of preventing the unlawful interception of oral, wire, or 

electronic communications by terrorists and others who may put the information gained 

through intercepted communications to an unlawful use; promoting the protection of 

privacy of oral, wire, or electronic communications; and protecting against threats of 

terrorism around the world. 

Although the availability of comparable goods from foreign sources limits the 

effectiveness of the surreptitious listening controls, these controls restrict access by the 

countries and persons subject to these controls to U.S.-origin commodities, technology, 

and software, and demonstrate U.S. determination to prevent the unlawful interception of 

communications, to promote privacy protection, and to oppose and distance itself from 

international terrorism. 

2. Compatibility with Foreign Policy Objectives. The Secretary has determined that 

the imposition of these controls is consistent with the foreign policy objectives of the 

United States and will not have any significant adverse foreign policy consequences. The 

imposition of surreptitious listening controls will enhance the U.S. Government’s ability 

to stop the supply of U.S.-origin items to persons engaged in, or supportive of, unlawful 

uses of intercepted communications, privacy violations, and acts of terrorism. The 

imposition of these controls is also compatible with overall U.S. policy toward Cuba, 

Iran, North Korea, Sudan, and Syria. The U.S. Government intends to promote privacy 

96 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 12 Surreptitious Listening 

protection and aid in deterring criminal activities, including terrorism, through these 

foreign policy-based controls. 

 

3. Reaction of Other Countries. The Secretary has determined that any adverse 

reaction to the imposition of surreptitious listening controls is not likely to render the 

controls ineffective nor will any adverse reaction by other countries be counterproductive to U.S. foreign policy interests. Most countries are generally supportive of 

U.S. efforts to prevent unlawful uses of intercepted communications, including uses of 

intercepted communications by terrorists, and to stop the proliferation of weapons of 

mass destruction in countries of concern. In addition, the sending or carrying of the 

devices in foreign commerce is already subject to independent criminal sanction. The 

imposition of foreign policy-based controls on these devices and related software and 

technology is not expected to result in any adverse reaction by other countries. 

4. Economic Impact on U.S. Industry. The Secretary has determined that any 

adverse effect of these controls on the economy of the United States, including the 

competitive position of the United States in the international economy, does not exceed 

the benefit to U.S. foreign policy objectives. Because sending or carrying the devices in 

foreign commerce is already subject to independent criminal sanction, the imposition of 

foreign policy-based controls on the devices and related software and technology will not 

have a discernable economic impact. 

In Fiscal Year 2007, the Department of Commerce approved 12 applications, valued at 

$1.4 million, for the export or reexport of surreptitious listening (SL) controlled items. 

In addition, the Department returned without action one application for items valued at 

$12,000. No applications were rejected. 

5. Effective Enforcement of Controls. The Secretary has determined that the 

United States has the ability to enforce these controls effectively. The imposition of 

foreign policy-based controls on the devices and related software and technology will 

enhance effective enforcement because the new controls have been introduced pursuant 

to the export control authorities delegated to the Department of Commerce. The U.S. 

Government can effectively enforce these controls by focusing on preventive 

enforcement, using regular outreach efforts to keep industry informed, and gathering 

leads on activities of concern. 

C. Consultation with Industry 

This November 2006 amendment to the EAR was published in the Federal Register in 

final form. Although there is no formal comment period, public comments on this 

amendment are welcome on a continuing basis. 

The Department of Commerce consults with the Regulations and Procedures Technical 

Advisory Committee (RPTAC), one of six such committees that advise the Bureau of 

97 

2008 Report on Foreign Policy-Based Export Controls 
Chapter 12 Surreptitious Listening 

Industry and Security (BIS), in preparation for publication of major regulatory changes 

affecting foreign policy controls. BIS did consult with the RPTAC prior to the 

publication of this rule. 

The Department of Commerce regularly solicits industry and public comment on these 

controls. In a September 5, 2007, Federal Register notice (72 FR 50912), the 

Department of Commerce solicited comments from industry on the effectiveness of U.S. 

foreign policy-based export controls. In addition, comments were solicited from the 

public via the BIS website. Comments from the Department’s six Technical Advisory 

Committees are solicited on an ongoing basis and are not specific to this report. The 

comment period closed on October 5, 2007. A detailed review of all public comments 

received can be found in Appendix I. 

D. Consultation with Other Countries 

The United States continues to consult with a number of countries, both on a bilateral and 

a multilateral basis. In general, most countries are supportive of measures designed to 

prevent the unlawful use of intercepted communications, protect privacy, and combat 

terrorism but do not implement strict export controls on these items similar to the United 

States’ export controls. The United States will consult with other countries as necessary 

regarding these changes in order to ensure compliance and encourage their efforts to 

deter terrorism and other criminal activity. 

E. Alternative Means 

The U.S. Government continually reviews the means by which it can curtail privacy 

violations and terrorism and has taken a wide range of diplomatic, political, and securityrelated steps to support this effort. Imposing these foreign-policy based controls 

enhances the aforementioned efforts in order to prevent terrorist-supporting countries 

from acquiring items subject to U.S. export control jurisdiction. In addition, these 

controls underscore the United States’ commitment to prevent criminal activity 

worldwide. 

F. Foreign Availability 

The commodities subject to these controls are likely available from foreign suppliers. 

The Department of Commerce is aware that these new controls will not prevent the 

shipment of such foreign-origin items from other countries, but we anticipate that the 

regulation will minimize the risk of diversion of U.S.-origin devices and related software 

and technology primarily useful for surreptitious interception of wire, oral, or electronic 

communications to end-users without a legitimate commercial need for such devices.

98 

2008 Report on Foreign Policy-Based Export Controls 
Appendix I Summary of Public Comments on Foreign Policy-Based Export Controls 

APPENDIX I

Summary of Public Comments 

on Foreign Policy-Based Export Controls

The Department of Commerce’s Bureau of Industry and Security (BIS) requested public 

comments on existing foreign policy-based export controls maintained under Section 6 of 

the Export Administration Act of 1979, as amended (EAA) through a Federal Register

notice published September 5, 2007 (72 FR 50912). In addition, comments were 

solicited from the public through the BIS Web page. Comments from the Department’s 

six Technical Advisory Committees are solicited on an ongoing basis and are not specific 

to this report. BIS requested comments on how existing foreign policy controls have 

affected exporters and the overall public. The notice invited public comments about 

issues such as the effectiveness of controls when foreign availability exists; whether the 

goals of the controls can be achieved through other means such as negotiations; the 

compatibility of the controls with the overall U.S. policy toward a country in question; 

the effect of controls on U.S. economic performance; and the ability to enforce the 

controls. 

The comment period closed on October 5, 2007. BIS received three sets of comments 

from the following organizations: Federation of Indian Chambers of Commerce and 

Industry USA, Industry Coalition on Technology Transfer, and Cogent Systems, Inc. 

BIS has made all comments available for review in the BIS Freedom of Information Act 

Reading Room available on the BIS Web page. BIS also makes the comments available 

for public review upon request. This Appendix summarizes the comments received. 

Industry Comments

On September 27, the Federation of Indian Chambers of Commerce and Industry (FICCI) 

USA submitted comments stating that BIS should review whether exports to India should 

remain subject to various controls as indicated on the Commerce Country Chart 

(Supplement No. 1 to Part 738 of the Export Administration Regulations). FICCI USA 

maintains that India’s record concerning control of high-technology items has been 

“exemplary” and India has never acted in a manner detrimental to U.S. national security 

or regional stability within South Asia. Therefore, FICCI USA asserts that no 

justification exists for U.S. controls on high-technology exports to India. Additionally, 

FICCI USA comments that BIS should review the Indian entities listed on BIS’s Entity 

List (Supplement No. 4 to Part 744 of the EAR). FICCI USA asserts that, given the 

current level of cooperation between the United States and India concerning space and 

nuclear technologies, there is no justification for entities subordinate to India’s Defense 

Research and Development Organization (DRDO), Department of Atomic Energy, and 

Indian Space Research Organization (ISRO) the to remain on the Entity List. FICCI 

USA also comments that BIS should review India’s designation as a Computer Tier 3 

99 

2008 Report on Foreign Policy-Based Export Controls 
Appendix I Summary of Public Comments on Foreign Policy-Based Export Controls 

destination as this impedes Indian involvement in joint research and production projects 

with countries such as Germany, Japan, and the United Kingdom. 

On October 5, the Industry Coalition on Technology Transfer (ICOTT) submitted 

comments stating that because foreign policy controls are unilateral in nature, they are 

largely ineffective. For that reason, ICOTT comments that the United States should 

impose unilateral controls only where the United States can justify the resulting injury to 

American workers and businesses against the “symbolic character” of the controls. 

ICOTT also recommends that unless the United States is effective in garnering 

multilateral support for its unilateral controls, the government should not renew such 

controls. In addition, ICOTT recommends that in instances where unilateral antiterrorism controls are imposed, License Exception RPL (servicing and replacement of 

parts and equipment) should be available for emergency services, including one-for-one 

replacement of parts, for use on commercial aircraft that are located in, owned by, or 

registered in sanctioned countries. 

On October 5, Cogent Systems, Inc. (Cogent) submitted comments requesting that BIS 

exclude one-to-many fingerprint retrieval systems from the Crime Control classification 

under Section 742.7 of the Export Administration Regulations, stating that it is no longer 

in the national interest to deny exports of these items to China under Section 902(b) of 

the Tiananmen Square Sanctions. Cogent claims that fingerprint retrieval systems from 

the world’s leading producers are already being sold in China and that continuing to deny 

exports of such items will: 1) jeopardize U.S. national security interests by undermining 

interoperability of fingerprint information with foreign countries; 2) jeopardize U.S. 

technology leadership and the shaping of international standards concerning automated 

fingerprint retrieval systems; and 3) result in the movement to China of technology 

investment regarding fingerprint retrieval systems. Cogent also asserts that the economic 

viability of the U.S. fingerprint identification industry is at stake. In its comments, 

Cogent analyzes the six factors set forth in BIS’s Federal Register notice requesting 

comments, (effectiveness of controls when there is foreign availability, whether the goals 

can be achieved by other means, including negotiations, etc.) and asserts that each factor 

supports the removal of fingerprint retrieval systems from the Crime Control 

Classification. For example, with respect to whether the controls are likely to achieve the 

intended foreign policy purpose, Cogent argues that foreign availability of the systems 

makes it unlikely that BIS’s licensing policy will motivate China to improve its human 

rights record. 

100 

2008 Report on Foreign Policy-Based Export Controls 
Appendix II Multilateral Export Control Regimes in 2007 

APPENDIX II 

Multilateral Export Control Regimes in 2007

WASSENAAR AG MTCR NSG

Argentina Argentina Argentina Argentina 

Australia Australia Australia Australia 

Austria Austria Austria Austria 

Belarus 

Belgium Belgium Belgium Belgium 

Brazil Brazil 

Bulgaria Bulgaria Bulgaria Bulgaria 

Canada Canada Canada Canada 

Croatia Croatia Croatia 

Cyprus Cyprus 

Czech Republic Czech Republic Czech Republic Czech Republic 

Denmark Denmark Denmark Denmark 

Estonia Estonia Estonia 

European Union (Observer) European Union (Observer) 

Finland Finland Finland Finland 

France France France France 

Germany Germany Germany Germany 

Greece Greece Greece Greece 

Hungary Hungary Hungary Hungary 

Iceland Iceland 

Ireland Ireland Ireland Ireland 

Italy Italy Italy Italy 

Japan Japan Japan Japan 

Kazakhstan 

Latvia Latvia Latvia 

Lithuania Lithuania Lithuania 

Luxembourg Luxembourg Luxembourg Luxembourg 

Malta Malta Malta 

Netherlands Netherlands Netherlands Netherlands 

New Zealand New Zealand New Zealand New Zealand 

Norway Norway Norway Norway 

People’s Republic of China 

Poland Poland Poland Poland 

Portugal Portugal Portugal Portugal 

Rep. of Korea (South Korea) Rep. of Korea (South Korea) Rep. of Korea (South Korea) Rep. of Korea (South Korea) 

Romania Romania Romania 

Russian Federation Russia Federation Russian Federation 

Slovak Republic Slovak Republic Slovak Republic 

Slovenia Slovenia Slovenia 

South Africa South Africa South Africa 

Spain Spain Spain Spain 

Sweden Sweden Sweden Sweden 

Switzerland Switzerland Switzerland Switzerland 

Turkey Turkey Turkey Turkey 

Ukraine Ukraine Ukraine Ukraine 

United Kingdom United Kingdom United Kingdom United Kingdom 

United States United States United States United States 

AG: Australia Group; MTCR: Missile Technology Control Regime; NSG: Nuclear Suppliers Group

101 

2008 Report on Foreign Policy-Based Export Controls 
Appendix III Selected Rules Published by the Department of Commerce 

102 

APPENDIX III 

Selected Rules Published by the Department of Commerce 

January 21, 2007 – January 19, 2008

 

Publication Date Federal Register 

Citation

Rule

01/26/07 72 FR 3722 North Korea: Imposition of New Foreign Policy Controls

03/02/07 72 FR 9433 Addition of Entities to the Entity List

03/06/07 72 FR 9847 Revisions and Clarifications of License Exception Availability, 

License Requirements and Licensing Policy for Certain Crime 

Control Items

05/07/07 72 FR 25680 Revisions to the Export Administration Regulations based on the 

2006 Missile Technology Control Regime Plenary Agreements

06/08/07 72 FR 31716 Amendment to General Order No. 3: Expansion of General Order 

and Addition of Certain Persons

07/12/07 72 FR 38008 Addition of Entities to the Entity List

09/12/07 72 FR 52000 Implementation of the Understandings Reached at the June 2007 

Australia Group (AG) Plenary Meeting; Addition to the List of 

States Parties to the Chemical Weapons Convention (CWC) 

10/24/07 72 FR 60248 Burma: Revision of the Export Administration Regulations 

2008 Report on Foreign Policy-Based Export Controls