The U.S. government’s control over the export of defense and dual-use items is intended to ensure that U.S. interests are protected in accordance with the Arms Export Control Act and the Export Administration Act. The U.S. government’s control over the export of defense and dual-use items is primarily divided between two departments—State and Commerce, respectively (see table 1)—with support for enforcement activities primarily from Commerce, through its Bureau of Industry and Security’s Office of Export Enforcement (OEE); Department of Homeland Security, through its Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE); and Justice, through the FBI and the U.S. Attorneys Office. State and Commerce require exporters to identify items that are on the departments’ control lists and to obtain license authorization from the appropriate department to export these items, unless an exemption applies. Exemptions are permitted under various circumstances, such as allowing for the export of certain items to Canada without a license. Many dual-use items are exempt from licensing requirements. While items can be exempt from licensing requirements, they are still subject to U.S. export control laws. Because exporters are responsible for complying with export control laws and regulations, regulatory and investigative enforcement agencies conduct outreach to educate exporters on these laws and regulations. When shipping controlled items, exporters are required to electronically notify CBP officials at the port where the item will be exported, including information on the quantity and value of the shipment, the issued export license number, or an indication that the item is exempt from licensing requirements. Export enforcement aims to ensure U.S.-controlled items do not fall into the wrong hands and to limit the possibility that illegal exports will erode U.S. military advantage. Export enforcement involves inspecting items to be shipped, investigating potential violations of export control laws, and punishing export control violators. When inspectors, investigators, and prosecutors have questions about whether an item is controlled and requires a license, they request a license determination. CBP and ICE request license determinations through ICE’s Exodus Command Center, which refers the request to State and Commerce; OEE requests determinations directly from Commerce licensing officers. Some FBI agents request license determinations through the Exodus Command Center, while others make such requests directly to State or Commerce. In fiscal year 2005, Department of Justice data showed that there were more than 40 individuals or companies convicted of over 100 criminal violations of export control laws. State reported over $35 million and Commerce reported $6.8 million in administrative fines and penalties for fiscal year 2005. See appendix II for a list of selected export control cases. For more than a decade, we have reported on a number of weaknesses and vulnerabilities in the U.S. export control system and made numerous recommendations, several of which have not been implemented. For example, in September 2002, we reported that Commerce improperly classified some State-controlled items as Commerce-controlled, increasing the risk that defense items would be exported without the proper level of review and control to protect national interests. In June 2006, we reported that this condition remains unchanged and that Commerce has not taken the corrective actions that we recommended in 2002. We have also reported on long-standing problems in enforcement, including poor cooperation among the investigative agencies. Enforcing U.S. export control laws and regulations is inherently complex. Multiple agencies are involved in enforcement and carry out various activities, including inspecting shipments, investigating potential export control violations, and taking punitive actions that can be criminal or administrative against violators of export control laws and regulations. Authorities for export control enforcement are provided through a complex set of laws and regulations. These authorities and some overlapping jurisdiction for conducting enforcement activities add to the complexity. Enforcement—which includes inspections, investigations, and punitive actions against violators of export control laws—is largely conducted by various agencies within Commerce, Homeland Security, Justice, and State depending on the facts and circumstances of the case. These agencies’ key enforcement responsibilities are shown in table 2. Inspections of items scheduled for export are largely the responsibility of CBP officers at U.S. air, sea, and land ports, as part of their border enforcement responsibilities. To help ensure that these items comply with U.S. export control laws and regulations, CBP officers check items against applicable licenses prior to shipment, selectively conduct physical examinations of cargo at the port and in warehouses, review shipping documents, detain questionable shipments, and seize items being exported illegally. As part of their responsibilities, CBP officers are required by State to decrement (reduce) the shipment’s quantity and dollar value from the total quantity and dollar value authorized by the exporter’s license. This process helps to ensure that the shipment does not exceed what is authorized and that the license has not expired. However, Commerce does not require CBP officers to decrement Commerce licenses. Commerce officials said they have shipping tolerances that allow exporters to ship controlled items exceeding the quantity and value approved in a license, but this varies based on the controlled item. CBP officers do not currently have a formal means for determining if exporters have exceeded authorized license quantities and values for dual-use items within any shipment tolerances permitted for that controlled item. As a result, they cannot ensure accountability on the part of exporters or that Commerce regulations have been properly followed. CBP has an automated export system, which is used for decrementing State licenses. This system has built-in tolerances to allow the shipment to exceed the total value of a State license by 10 percent, as permitted by regulations. Investigations of potential violations of export control laws for dual-use items are conducted by agents from OEE, ICE, and FBI. Investigations of potential export violations involving defense items are conducted by ICE and FBI agents. FBI has authority to investigate any criminal violations of law in certain foreign counterintelligence areas. The investigative agencies have varying tools such as undercover operations and overseas investigations for investigating potential violations and establishing cases for potential criminal or administrative punitive actions. Punitive actions, which are either criminal or administrative, are taken against violators of export control laws and regulations. Criminal violations are those cases where the evidence shows that the exporter willfully and knowingly violated export control laws. U.S. Attorneys Offices prosecute criminal cases in consultation with Justice’s National Security Division. These cases can result in imprisonment, fines, forfeitures, and other penalties. Punitive actions for administrative violations can include fines, suspension of an export license, or denial or debarment from exporting, and are imposed primarily by State or Commerce, depending on whether the violation involves the export of a defense or a dual-use item. In some cases, both criminal and administrative penalties can be levied against an export control violator. The export control and investigative enforcement agencies also conduct outreach activities, primarily educating exporters on U.S. export control laws and regulations. For example, in fiscal year 2005, ICE agents conducted more than 1,500 industry outreach visits around the country. Outreach activities can include seminars and programs, specialized training, publications, advice lines, Web sites, and individual meetings with industry, academia, and other government agencies. These activities can result in companies self-disclosing violations, tips and reports of potential violations by others, and cooperation in investigations and intelligence gathering. Authorities for export control enforcement are provided through a complex set of laws and regulations. For defense items, authorities are granted under the Arms Export Control Act, the Department of Justice Appropriations Act of 1965, the USA Patriot Improvement and Reauthorization Act, and the Foreign Wars, War Materials and Neutrality Act. These statutes and the regulations stemming from them give concurrent jurisdiction for investigations to ICE and FBI (see fig. 1). For dual-use items, authorities are granted under the Export Administration Act, the International Emergency Economic Powers Act, the Department of Justice Appropriations Act of 1965, the USA Patriot Improvement and Reauthorization Act, and the Foreign Wars, War Materials and Neutrality Act. These laws and their implementing regulations give investigative authority for dual-use items to OEE as well as to ICE and FBI, which also have investigative authority for defense items (see fig. 2). Several key challenges exist in enforcing export control laws—challenges that potentially reduce the effectiveness of enforcement activities. First, overlapping jurisdiction for investigating potential export control violations and instances where coordination among the investigative agencies has not been effective have had an impact on some cases. Second, license determinations—which confirm whether an item is controlled by State or Commerce, and thereby help confirm whether a violation has occurred—are key to ensuring the pursuit of enforcement activities and are dependent on complete and specific information available at the time. Third, prosecuting export control cases can be difficult, since securing sufficient evidence to prove the exporter intentionally violated export control laws can represent unique challenges in some cases. Finally, multiple and sometimes competing priorities have made it difficult for enforcement agencies to maximize finite resources in carrying out export control enforcement responsibilities. While ICE, OEE, and FBI have jointly coordinated on investigations, coordination can be challenging, particularly in terms of agreeing on how to proceed with a case. Formal agreements for coordinating investigations do not exist among all the investigative agencies. The extent to which agencies coordinate and cooperate on investigations is largely dependent on individual work relationships. Agencies have sometimes not agreed on how to proceed on cases, particularly those involving foreign counterintelligence. For example, FBI and OEE agents disagreed as to whether certain dual-use items planned for export warranted an investigation. Specifically, without coordinating with OEE and ICE, FBI pursued the investigation, arrested the exporter, and held the shipment of items, valued at $500,000. Ultimately, criminal charges were not pursued because the items did not require a license. With respect to foreign counterintelligence cases involving export controls, investigators have not always been certain about their respective roles on these cases.