This is the accessible text file for GAO report number GAO-03-43 
entitled 'Nonproliferation: Strategy Needed to Strengthen Multilateral 
Export Control Regimes' which was released on October 25, 2002.



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Report to Congressional Committees:



United States General Accounting Office:



GAO:



October 2002:



NONPROLIFERATION:



Strategy Needed to Strengthen Multilateral Export Control Regimes:



GAO-03-43:



Contents:



Letter1:



Results in Brief:



Background:



Multilateral Export Control Regimes Have Helped Set Standards and Stem 

Proliferation:



Weaknesses Could Limit Regimes’ Effectiveness:



Obstacles to Strengthening Export Control Regimes:



Conclusion:



Recommendations for Executive Action:



Agency Comments and Our Evaluation:



Appendix I: Scope and Methodology:



Appendix II: List of Members of Multilateral Export Control 

Regimes:



Appendix III: Reporting Practices of Multilateral Export Control 
Regimes:



Appendix IV: Comparison of Control Lists of Multilateral 

Export Control Regimes:



Appendix V: Some Factors Considered in Accepting New 

Members to Regimes:



Appendix VI: Comments from the Department of Commerce:



Appendix VII: Comments from the Department of Energy:



Appendix VIII: Comments from the Department of State:



GAO Comments:



Appendix IX: GAO Contact and Staff Acknowledgments:



GAO Contact:



Acknowledgments:



Tables:



Table 1: Purposes of the Multilateral Export Control Regimes:



Table 2: Denial Reporting Distribution Times and Procedures for Each 

Regime:



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



Table 4: Regime Control Lists and Items: MTCR:



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



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



Figures:



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



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

Denials: 951):



Abbreviations:



MTCRMissile Technology Control Regime

WMDweapons of mass destruction:



United States General Accounting Office:



Washington, DC 20548:



October 25, 2002:



The Honorable Jesse Helms

Ranking Minority Member

Committee on Foreign Relations

United States Senate:



The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate:



The advent of global terrorism has heightened concerns about the long-

standing threat of proliferation of weapons of mass destruction. The 

Under Secretary of State for Arms Control and International Security 

stated recently that preventing the next wave of terrorist acts 

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

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

Multilateral export control regimes[Footnote 1] are voluntary, 

nonbinding arrangements among like-minded supplier countries that aim 

to restrict trade in sensitive technologies to peaceful purposes. 

Regime members agree to restrict such trade through their national laws 

and regulations, which set up systems to license the exports of 

sensitive items.



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

trade in chemical and biological items; the Missile Technology Control 

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

Arrangement, which focuses on trade in conventional weapons and related 

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

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

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

information about each others’ export licensing decisions, including 

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

common export control practices and control lists of sensitive 

equipment and technology into national laws or regulations.



Because of your interest in efforts to strengthen the multilateral 

export control regimes, this report (1) describes their 

accomplishments, (2) assesses their weaknesses, and (3) identifies 

obstacles that the United States faces in trying to strengthen them. To 

address these issues, we reviewed analyses prepared by the Departments 

of State, Commerce, Defense, and the intelligence community, and 

studies prepared by nonproliferation specialists in academia. We also 

reviewed regime documentation, including export denial and approval 

information, and met with regime representatives in Paris, France 

(MTCR); Vienna, Austria (the Nuclear Suppliers Group and the Wassenaar 

Arrangement); and Canberra, Australia (the Australia Group). We also 

interviewed officials of the governments of Australia, Austria, Canada, 

France, Japan, the Netherlands, New Zealand, and the United Kingdom, 

and received written responses to questions we provided to the 

governments of Canada, Japan, Germany, Russia, and Hong Kong.



Results in Brief:



Nonproliferation experts credit the Australia Group, the MTCR, the 

Nuclear Suppliers Group, and the Wassenaar Arrangement with several 

accomplishments. The regimes have helped set international standards 

for limiting exports of sensitive items and helped stem proliferation 

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

Group established new controls for items with both nuclear and 

nonnuclear uses in the aftermath of the Persian Gulf War and 

revelations of Iraq’s nuclear weapons development program. The 

Australia Group has helped raise the costs of attaining a chemical 

weapons capability by cutting off sources of supply and forcing 

proliferators to use less efficient means to produce chemical weapons. 

The MTCR helped stop or delay development of missile programs in 

Argentina, Brazil, and Egypt. However, because national governments use 

a variety of other policy tools to combat proliferation, it is not 

possible to attribute these accomplishments exclusively to the regimes.



We identified several weaknesses in regime activities that could hinder 

their goal of curbing proliferation of sensitive items and 

technologies. First, not all regime members share complete and timely 

information on their export licensing decisions, including denials and 

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

of 27 export denials to the Australia Group between 1996 and 2001, as 

expected under regime procedures. Also, about half of the members of 

the Wassenaar Arrangement--the only regime with reporting time frames-

-did not submit their export denials on time. Second, several factors 

complicate the regime goal of applying export controls consistently. It 

takes some members as much as 1 year to adopt agreed-upon changes to 

control lists into their national laws or regulations. This lapse of 

time might allow proliferators seeking sensitive items to exploit 

disparities in regime members’ control lists. In addition, we found 

significant differences in how regime members implement agreed-upon 

controls, such as those for high performance computers. Finally, export 

controls cannot be applied consistently until countries joining regimes 

have effective export control systems in place. According to the U.S. 

government, at least three countries--Argentina, Belarus, and Russia--

did not have effective control systems in place when they became 

members of certain regimes.



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

to strengthen the effectiveness of multilateral export control regimes. 

First, the difficult process of making consensus-based decisions limits 

options for reforming the regimes. Under the current process, a single 

member can block regime decisionmaking. Second, the voluntary and 

nonbinding character of the regimes means they have no explicit tools 

to enforce members’ compliance with their nonproliferation commitments. 

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

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

government said violated Russia’s commitment to that regime. Third, the 

rapid pace of technological change in a globalized economy makes it 

difficult to keep control lists current because these lists need to be 

updated more frequently. Fourth, “secondary proliferation,” the growing 

capability of nonmember countries to develop technologies used for 

weapons of mass destruction and trade them with other countries of 

concern, undermines the regimes’ ability to prevent proliferation. For 

example, North Korea has exported significant ballistic missile-related 

equipment, components, materials, and technical expertise to countries 

of concern, including Iran. Finally, the U.S. government has no 

specified or agreed-upon criteria for assessing the regimes’ 

effectiveness, despite the stated goal of strengthening their 

effectiveness.



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

policy representative to the multilateral export control regimes, take 

steps to establish a strategy to strengthen these regimes. As part of 

this effort, the Secretary should work with other regime members to 

increase information sharing, improve the consistent adoption and 

implementation of export controls, and assess ways to overcome 

organizational obstacles to reaching decisions and enforcing members’ 

compliance with their regime commitments. We are also recommending that 

the Secretary (1) report U.S. denials of all export licenses for items 

controlled by a multilateral export control regime and (2) establish 

criteria for assessing the effectiveness of the regimes.



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

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

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

the report. The Department of Defense declined to provide written 

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

our recommendation to establish a strategy for enhancing the 

effectiveness of the multilateral export control regimes as part of a 

recently announced review of the regimes ordered by the President. 

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

shortcomings of nonproliferation significance. In fact, our report 

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

with its regime commitments, a matter of major nonproliferation 

significance. We also identified several key weaknesses in regime 

processes that undermine regime effectiveness.



Background:



Multilateral export control regimes are a key policy instrument in the 

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

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

enhanced multilateral cooperation of all key policy instruments--

international treaties, multilateral export control regimes, export 

controls, and security assistance to other countries--in the war 

against terrorism and the proliferation of weapons of mass 

destruction.[Footnote 2]



The multilateral export control regimes are voluntary, nonbinding 

arrangements among like-minded supplier countries that aim to prevent 

the spread of WMD and missile technology and equipment by restricting 

trade in sensitive technologies to peaceful purposes. While countries 

make no legally binding commitments in joining them, participating 

countries undertake a political commitment to abide by the goals and 

principles of the regime. The regimes operate on the basis of consensus 

of all members and decisions on how to implement and interpret regime 

decisions are left to the national discretion of each member. The 

Australia Group, the MTCR, and the Nuclear Suppliers Group focus on 

trade related to WMD and their delivery systems and are referred to as 

WMD regimes; the Wassenaar Arrangement focuses on trade in conventional 

weapons and related dual-use items.



Specifically, the Nuclear Suppliers Group and the Australia Group seek 

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

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

MTCR seeks to limit the spread of missile-related equipment and 

technology. The Wassenaar Arrangement aims to contribute to 

international security and stability by promoting greater 

responsibility and transparency in arms and sensitive dual-use goods 

and technology transfers. None of the regimes identify specific 

countries as targets. Collectively, however, the regimes strive to 

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

countries’ of concern to acquire sensitive technologies and 

capabilities.



Table 1: Purposes of the Multilateral Export Control Regimes:



Regime: Nuclear Suppliers Group; Year established: 1975; Purpose: To 

ensure that nuclear trade for peaceful purposes does not contribute to 

the proliferation of nuclear weapons or explosive devices while not 

hindering such trade.; Precipitating event: India’s 1974 nuclear 

explosion; Number of members: 40.



Regime: Australia Group; Year established: 1985; Purpose: To ensure 

that the industries of the participating countries do not assist, 

either purposefully or inadvertently, states seeking to acquire a 

chemical and biological weapons capability.; Precipitating event: Iraqi 

use of chemical weapons against Iran; Number of members: 33.



Regime: MTCR; Year established: 1987; Purpose: To limit the risks of 

proliferation of weapons of mass destruction (i.e., nuclear, chemical, 

and biological weapons), by controlling transfers that could make a 

contribution to delivery systems (other than manned aircraft) for such 

weapons.; Precipitating event: Missile developments in the late 1970s 

and early 1980s; Number of members: 33.



Regime: Wassenaar Arrangement; Year established: 1996; Purpose: To 

contribute to regional and international security and stability, by 

promoting transparency and greater responsibility in transfers of 

conventional arms and dual-use goods and technologies, thus preventing 

destabilizing accumulations.; Precipitating event: Dissolution of the 

Coordinating Committee for Multilateral Strategic Export Controls; 

Number of members: 33.



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

Arrangement.



[End of table]



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

response to major proliferation events. The Nuclear Suppliers Group was 

established in 1975 after India--a nonnuclear weapons state--tested a 

nuclear explosive device in 1974 and was strengthened after the1991 

Gulf War and revelations of Iraq’s efforts to develop weapons of mass 

destruction. The Australia Group was established in 1985 as a response 

to the use of chemical weapons in the Iran-Iraq War, and the MTCR was 

established in 1987 in response to missile developments in the 1970s 

and 1980s. The Wassenaar Arrangement, in contrast, was created in 1996 

after the dissolution of its Cold War predecessor[Footnote 3] to 

include conventional technologies not covered by the other regimes.



The regimes also share overlapping memberships of between 33 to 40 

states that are generally suppliers of sensitive technologies. All 

regimes except the Wassenaar Arrangement have added new members in 

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

Although China is a major supplier, it is not a member of any of these 

regimes but has declared its commitment to abide by the original 1987 

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

multilateral nuclear export control group called the Zangger 

Committee.[Footnote 4] See appendix II for a list of the members of 

each regime.



All the regimes have discussed ways to address terrorism since 

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

example, the Australia Group added counterrorism as an official purpose 

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

effort to control the types of items that terrorists, rather than 

states, would seek to develop chemical or biological weapons. These 

items included toxins, biological equipment, and the transfer of 

knowledge. The Wassenaar Arrangement amended its guidelines to add 

language exhorting its members to continue to prevent the acquisition 

of conventional arms and technologies by terrorists. The Nuclear 

Suppliers Group is considering proposals to provide more guidance to 

governments for reviewing export licenses for terrorism-related 

concerns. MTCR members in September 2002 announced that they will 

further study how possible changes to the MTCR guidelines and control 

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

technology falling into the hands of terrorists.



Multilateral Export Control Regimes Have Helped Set Standards and Stem 

Proliferation:



Nonproliferation experts credit the Australia Group, the MTCR, the 

Nuclear Suppliers Group, and the Wassenaar Arrangement with several 

accomplishments. These include helping set international standards for 

limiting exports of sensitive items and helping stem proliferation in 

particular countries of concern. Because the multilateral export 

control regimes are only one of several policy tools that national 

governments use to combat the proliferation of weapons of mass 

destruction and advanced conventional weapons, it is difficult to 

attribute accomplishments exclusively to the regimes.



Setting International Standards for Exports of Sensitive Items:



Each regime has helped set international standards for how countries 

should control exports of sensitive technology.



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

governing exports of nuclear materials and equipment. These guidelines 

established several requirements for the members to apply, including 

the application of International Atomic Energy Agency safeguards at 

facilities using controlled nuclear-related items. Subsequently, in 

1992, the Nuclear Suppliers Group broadened its guidelines by requiring 

that members insist on full-scope safeguards as a condition of supply 

for their nuclear exports. Full-scope safeguards require a country to 

have an agreement with the International Atomic Energy Agency to apply 

inspection and monitoring procedures for all nuclear facilities in a 

country, not only those receiving a particular nuclear item from a 

supplier. The Nuclear Suppliers Group, in the aftermath of the Persian 

Gulf War and revelations of Iraq’s nuclear weapons development program, 

also created a dual-use control regime, which established new controls 

for items with nuclear and nonnuclear uses that do not trigger a 

requirement for international safeguards when exported.[Footnote 5]



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

coordinating national policies aimed at restricting the proliferation 

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

2002, the Australia Group adopted a provision in its new guidelines for 

licensing sensitive chemical and biological items that made it the only 

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

all” controls authorize a government to require an export license for 

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

proliferation program if exported. Furthermore, the Australia Group 

added controls on technology associated with dual-use biological 

equipment, as well as controls on the intangible transfer of 

information and knowledge that could be used for chemical and 

biological weapons purposes.



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

as the first international standard for responsible missile-related 

exports, according to Department of State officials. In addition, from 

1999 to 2001, MTCR developed an International Code of Conduct intended 

to create a voluntary political commitment, open to all countries, 

against ballistic missile proliferation. The code--scheduled to be 

launched by the Netherlands on behalf of the European Union--is to 

consist of a set of broad principles, general commitments, and modest 

confidence-building measures and is intended to supplement the MTCR.



* In 1996, the Wassenaar Arrangement was successfully established to 

succeed the Coordinating Committee for Multilateral Strategic Export 

Controls despite the opposition of some countries, according to 

nonproliferation specialists. One notable accomplishment of the 

Wassenaar Arrangement is the successful development of an agreement 

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

the Stinger, according to State Department officials. Although the 

former head of the Wassenaar Secretariat stated that the achievements 

of the Wassenaar Arrangement are limited and that “there have been no 

spectacular results,” he stated that the situation would be worse 

without the Arrangement.



Stemming Proliferation in Countries of Concern:



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

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

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

missile programs, according to Department of State officials. 

Specifically, the MTCR contributed to ending sensitive ballistic 

missile programs in a number of countries, including Argentina, Brazil, 

Egypt, South Africa, and Taiwan. The MTCR also may have helped slow 

missile development in India, Iran, Israel, North Korea, and Pakistan, 

whose missile programs might have been further along or more advanced 

in the absence of the regimes, according to nonproliferation experts. 

Similarly, the Nuclear Suppliers Group helped convince Argentina and 

Brazil to accept full-scope safeguards on their nuclear programs and 

end nuclear activities without safeguards in exchange for expanded 

access to international cooperation for peaceful nuclear 

purposes.[Footnote 6]



Regimes generally have helped raise the costs to proliferators of 

acquiring sensitive technologies, according to nonproliferation 

experts. They have induced most major suppliers to responsibly control 

their exports and have significantly reduced the availability of 

technology and equipment available to programs of concern, according to 

a Department of State official. Moreover, regime members have made it 

more difficult, more costly, and more time consuming for proliferators 

to obtain the expertise and material needed to advance their programs. 

The regimes’ efforts have caused delays, forced proliferators to use 

elaborate procurement networks, and forced them to rely on older, less 

effective technology, according to the official. For example, the 

Australia Group may have raised the cost of attaining an offensive 

chemical weapons capability by eliminating some sources of supply, 

according to nonproliferation experts and regime public statements. 

They noted that, as a result, some countries of concern have stopped 

pursuing the acquisition of chemical weapons.



Weaknesses Could Limit Regimes’ Effectiveness:



We identified several significant weaknesses in the activities of the 

regimes that could limit their ability to curb proliferation. 

Specifically, we found that regime members do not (1) share complete 

and timely export licensing information or (2) harmonize their export 

controls promptly to accord with regime decisions.



Members Do Not Report Complete and Timely Information to Regimes:



We found deficiencies in the sharing of export licensing information 

between regime members.[Footnote 7] These deficiencies could hamper the 

ability of regime members to factor key information about potential 

proliferators into their export licensing decisions. For example, we 

found that regime members may not always share complete information in 

reporting export denials to the regimes. In addition, reporting 

information on export denials for Wassenaar Regime members is generally 

slow. Other regimes have not set deadlines for their members to report 

such information and cannot determine how long it takes members to 

report. Furthermore, three regimes do not collect export information 

that would enable members to consult with each other before approving 

licenses for exports that other members have denied. Members lack such 

information because most regimes do not expect members to report 

approvals of export licenses. Finally, only two regimes use electronic 

data sharing systems to post and retrieve data. As a result, we found 

significant delays in regime members’ ability to access information 

quickly for those regimes lacking this capability.



Members May Not Always Share Complete Information:



All four regimes expect members to report denials of export licenses 

for controlled dual-use items. By sharing information about the 

licenses it has denied, a regime member helps other members avoid 

inadvertently undercutting its export licensing decisions and provides 

regime members with more complete information for reviewing 

questionable export license applications.[Footnote 8] Appendix III 

describes the export denial reporting procedures for each regime.



Despite the expectation to report export denials, the United States did 

not notify the Australia Group between 1996 and 2002 that the U.S. 

government denied 27 licenses to export Australia Group-controlled 

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

licenses involved chemicals that could be used for precursors for toxic 

chemical agents and the remaining licenses involved other chemical or 

biological equipment and technology. In contrast, the United States 

reported multiple denials to each of the other regimes in the same 

period (see fig. 1). The Department of State said that the United 

States was not required to report these denials to the Australia Group 

because the U.S. government denied them for reasons other than chemical 

and biological weapons nonproliferation purposes.[Footnote 9] However, 

officials of the Australia Group Secretariat disagreed with this 

assertion. They stated that Australia Group members should notify the 

Australia Group Chair whenever they deny licenses to export Australia 

Group-controlled items, including those controlled under another 

regime. Reporting such denials, they stated, would help the Australia 

Group maintain its effectiveness, ensure that other members’ denials 

are not undercut, monitor and analyze export trends, and promote 

compliance with regime commitments. Furthermore, in its technical 

comments on this report, the Department of State agreed that sharing 

information about export licenses is a valuable element of information-

sharing efforts, but State could not explain why it did not share these 

27 denials under the regime’s broader information exchange activities.



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



[See PDF for Image]



Source: GAO analysis of Department of State data.



[End of Figure]



We found that member states may not be providing complete information 

regarding their export denials. We were unable to definitively 

establish the reasons why other nations have not reported denials 

because we do not have access to their export licensing data. However, 

our analysis of the denial reporting data available to us also reveals 

that a significant percentage of each regime’s membership has never 

reported any denials. We found that the percentage of members in each 

regime that have never reported export denials ranged from 45 percent 

in one regime to 65 percent in another.



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

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

regime’s denial reporting recommended an evaluation to determine why 

members were submitting few denial notifications, we saw no evidence 

that the regime had conducted such an analysis. They speculated that 

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

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

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

Japan, informally discourage exporters from applying for licenses that 

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

foreign government, and regime officials. Because such “informal 

denials” are not reported to the regimes, they do not alert other 

regime members that a potential country of concern may be seeking an 

item.



When denial notifications are aggregated for all regimes, three 

countries accounted for 66 percent of all denial notifications. The 

United States, relative to other regime members, has reported a large 

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

percentage of denial notifications by country aggregated for all the 

regimes.[Footnote 10]



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

Denials: 951):



[See PDF for Image]



[A] References to particular country names, other than the United 

States, are omitted for reasons of classification.



Source: GAO analysis of Department of State data.



[End of Figure]



Denial Reporting Is Slow for Many Wassenaar Members, but Timeliness 

Cannot Be Assessed for Other Regimes:



All four regimes generally expect members to report denials of export 

licenses for controlled dual-use items in a timely fashion.[Footnote 

11] Prompt export denial reporting can help ensure that a country of 

concern cannot “shop around” after being denied a license by a regime 

member. According to the chair of one regime, even a month’s delay in 

sharing such information would provide a country of concern with more 

than enough time to shop around for another source of a sensitive item.



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

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

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

dual-use items on its control lists no later than 60 days after the 

date of the denial; denial notices for less sensitive items--over 75 

percent of dual-use items on Wassenaar control lists--are expected to 

be reported in an aggregated format every 6 months. We found that the 

Wassenaar Arrangement’s members submit these denial notifications on 

schedule only about 36 percent of the time.[Footnote 12] However, the 

Wassenaaar Arrangement Secretariat stated that a valid picture of 

denial or other notifications can be gained only when all the 

notifications are entered into the database, an action that is still in 

process. The Secretariat noted that any analysis done on the 

notifications before this milestone has been achieved would be flawed 

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

correctly in early 2003.



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

reporting to regimes may not be timely is because the U.S. government 

does not report export denials until after an exporter completes or 

foregoes an appeal of the denial. In response to our enquiries, the 

officials from the Department of Commerce’s Bureau of Industry and 

Security recommended to the Department of State in August 2002 that the 

United States report all denials to the appropriate regime at the time 

that the exporter is first officially notified of the intent to deny 

the license application. In comments on a draft of this report, the 

Department of State said that it proposed to the Department of Commerce 

that it either should seek the exporter’s agreement to forego appeals 

or that the U.S. government should circulate a “denial on inquiry” 

notification to the regime until the export application is final.



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

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

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

undermining the value of the reporting system. We could not determine 

the time it takes for Australia Group or Nuclear Suppliers Group 

members to report export denials because their members do not report 

dates of export denials uniformly. For example, a Nuclear Suppliers 

Group member may report its denial “notification date” as either (1) 

the actual date that it denied the export or (2) the date it 

transmitted the denial to the regime. Similarly, we could not determine 

precise MTCR denial reporting times because the MTCR export denial data 

maintained by the Department of State records only the month of the 

denial. U.S. and foreign government officials agreed that denial 

reporting for the regimes needs to be more timely to improve regime 

effectiveness.



Not Sharing Information on Approved Exports Hampers Regimes:



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

nonmembers would help other regime members identify possible 

proliferation patterns and determine whether specific exports had 

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

Wassenaar Arrangement, expects its members to share information on 

approved export licenses. Because the Wassenaar Arrangement aims to 

prevent destabilizing accumulations of weapons and sensitive dual-use 

technologies in regions around the world, it gathers information about 

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

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

officials, the Wassenaar Arrangement gathers this information only once 

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

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

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

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

certain semiconductor manufacturing equipment lacks enough detail to 

reveal the equipment’s capabilities or intended end use and is of 

little practical use for determining the semiconductor manufacturing 

capability of the country to which the equipment is exported.[Footnote 

13]



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

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

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

member will export a similar item without first consulting with the 

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

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

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

weakness, the United States proposed in May 2002 that the Nuclear 

Suppliers Group require its members to begin reporting approval 

information. Department of State officials said members discussed the 

feasibility of this proposal in September 2002, but could not say if or 

when this proposal would be implemented because of members’ concerns 

about reporting proprietary information. One Department of State 

official said that the regimes do not need to share this information to 

identify undercuts because the members are “self-policing” and their 

adherence to the “no undercut” policy is based on trust.



Only Two Regimes Use Electronic Data Systems to Send and Retrieve 

Information on Denied Exports:



Two regimes, the Nuclear Suppliers Group and the Wassenaar Arrangement, 

have established electronic information systems for nearly instant, 

world-wide communications that can help to improve the timeliness and 

quality of information sharing, especially export denial reporting. The 

Nuclear Suppliers Group Information Sharing System (NISS) was 

originally set up around 1993, according to a Los Alamos National 

Laboratory official. The Wassenaar Arrangement Information System 

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

participating countries to post export denial notices almost as soon as 

the participating government issues the denial.[Footnote 14] The 

Australia Group has investigated setting up its own system and, in 

2001, inquired about the NISS. However, it has not made a commitment to 

move to an electronic information and document management system. 

Department of Commerce officials stated that the U.S. government has 

some concerns about the security of information on an electronic system 

for this regime and the MTCR since much of the data to be shared would 

be classified.



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

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

days for the Nuclear Suppliers Group to as much as 30 days for the 

MTCR. The members of both the Nuclear Suppliers Group and Wassenaar 

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

member governments officially issue the denials.



Table 2: Denial Reporting Distribution Times and Procedures for Each 

Regime:



Regime: Australia Group; Frequency regimes report denied exports to 

members: Weekly; Media for regimes to report denied exports: Paper 

(physically delivered).



Regime: MTCR; Frequency regimes report denied exports to members: 

Monthly; Media for regimes to report denied exports: Paper (physically 

delivered).



Regime: Nuclear Suppliers Group; Frequency regimes report denied 

exports to members: 2 days (average); Media for regimes to report 

denied exports: Electronic E-mail system.



Regime: Wassenaar Arrangement; Frequency regimes report denied exports 

to members: Not available[A]; Media for regimes to report denied 

exports: Electronic E-mail system.



[A] Frequency could not be determined because of data limitations noted 

by the Wassenaaar Arrangement Secretariat.



Source: GAO analysis of Department of State data.



[End of table]



We observed significant differences in timeliness of report 

distribution to memberships and data retrieval among the regimes using 

electronic information systems and those not using them. State 

Department officials retrieved documents and export denial 

notifications that we requested from the NISS and the WAIS electronic 

systems in minutes. In contrast, State officials provided us with the 

same type of information for the MTCR and the Australia Group 6 months 

after we requested it. State officials said that this took so long 

because they had to manually search drawers of paper files and that new 

staff could not readily find documents filed by staff who were on 

leave. In addition, Department of State and Energy officials showed us 

how they could search the NISS in various ways to identify patterns of 

proliferators and evidence of countries of concern shopping for 

controlled items among several regime members.



The electronic information systems also provide more uniform data. 

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

arrived at the Wassenaar Arrangement Secretariat in a variety of 

formats, with individual data fields often presented in noncomparable 

ways among members, according to government and Secretariat officials. 

Member countries are more likely to provide uniform and comparable data 

that can be more easily analyzed because the electronic forms have 

reporting fields that must be filled in correctly before submission.



Differences in How Members Implement Export Controls Can Undermine the 

Regime Goal of Harmonization:



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

regime members to review and agree upon common control lists of 

sensitive items and technologies and approaches to control them. (See 

app. IV for a description of the control lists developed by each regime 

and examples of the items on each list.) However, several factors 

undermine this goal. First, regime members may control an item 

differently because some members take significantly longer than others 

to adopt agreed-upon regime changes into their national laws or 

regulations. In addition, only one regime tracks whether its members 

have adopted regime control list changes; none of the regimes tracks 

when these changes are implemented. Second, in some cases, there are 

significant differences in how members implement the same export 

controls that may reduce the effectiveness of common nonproliferation 

efforts. Finally, export controls cannot be applied consistently until 

countries joining regimes have effective export control systems in 

place. According to the U.S. government, at least three countries--

Argentina, Belarus, and Russia--did not have effective control systems 

in place when they became members of certain regimes.



Some Members Take Longer Than Others to Adopt Agreed-upon Changes:



Each regime member is expected to adopt and implement control list 

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

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

proliferators could exploit these time lags to obtain sensitive 

technologies by focusing on regime members that are slowest to 

incorporate the changes. Only the Australia Group attempts to identify 

if members adopted the most recently agreed-upon controls in their 

domestic regulations and laws, although it does not track the dates 

that members do so. Based on our analysis, we found some significant 

differences among members in the time taken to adopt agreed-upon 

control list changes into their national laws or regulations. In the 

case of the Wassenaar Arrangement, the European Union adopted December 

2000 plenary changes within 3 months, whereas the United States did not 

adopt all these changes into export regulations until 15 months later 

(March 2002.)[Footnote 15] In comparison, the European Union[Footnote 

16] adopted Nuclear Suppliers Group plenary changes within a year of 

the Nuclear Suppliers Group plenary, and Japan adopted regulations for 

all regime changes within 6 months. Department of Commerce officials 

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

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

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

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

United States also explains in its regulations the purpose behind the 

regulatory change and how it will affect the exporter, according to the 

officials.



Significant Differences Found in Members’ Implementation of Controls:



Once regime members have adopted similar changes to export control 

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

how member states implement them. The Assistant Secretary of Commerce 

for Export Administration emphasized the importance of minimizing these 

differences when he said in October 2001 that member countries 

implement agreed-upon control lists differently with a substantial 

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

that its export controls on high-performance computers, which use a 

measure of computer performance to indicate when an export license is 

required, are consistent with those of Wassenaar Arrangement controls. 

Both the U.S. and Wassenaar Arrangement control thresholds are set at 

28,000 millions of theoretical operations per second (MTOPS); computers 

above this level would require a license for export.[Footnote 17] 

However, the United States also maintains a “license exception” to this 

threshold. In January 2002, the President announced that this control 

threshold would increase from 85,000 MTOPS to 190,000 MTOPS; only 

computers above this higher threshold to be exported to countries such 

as China, India, and Russia would require a license. As a result of 

this practice and of U.S. resistance to members’ efforts to remove or 

revise the current performance measure for computers, several Wassenaar 

members have accused the United States of unilateral action at odds 

with regime harmonization goals. Department of State officials 

expressed concern that continued U.S. resistance without adequate 

justification would cause some countries to unilaterally remove items 

from their national control lists.[Footnote 18] According to the 

Department of Commerce, the United States and the other Wassenaar 

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

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

the United States had changed its license exception control level.



Differences in how members implement agreed-upon export controls may 

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

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

controls--controls that authorize a government to require an export 

license for items that are not on control lists but that could 

contribute to a WMD proliferation program if exported--and to make this 

requirement an attachment to its new guidelines. The United States has 

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

strengthening nonproliferation efforts.[Footnote 19] However, while 

most members of the WMD regimes have adopted catch-all controls, 

significant differences over how members implement them raise questions 

about their effectiveness in stopping proliferation. For example, under 

some countries’ catch-all controls, the government must show that an 

exporter had absolute knowledge that an export would support a WMD 

proliferation activity to require a license or to prosecute a violation 

of law. Under other countries’ catch-all controls, such as those of the 

United States, the government needs to show only that an exporter knew 

or suspected that an export would support a WMD proliferation activity. 

A 2001 Department of Commerce report affirmed that different countries’ 

standards complicate law enforcement cooperation, and Commerce noted 

that even the United States faces challenges in enforcing catch-all 

controls on dual-use goods because it is difficult to detect, 

investigate, and prosecute cases under the U.S. catch-all provision 

standard.[Footnote 20]



Lack of Effective Export Control Systems Weakens Harmonization Efforts:



Regimes consider the implementation of an effective national export 

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

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

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

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

members cannot ensure that they are implementing agreed-upon controls 

consistently. While regime bodies, such as the chair or secretariat, do 

not evaluate the export control systems of prospective members, 

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

prospective member.



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

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

to U.S. government officials and documents.



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

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

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

member of the Nuclear Suppliers Group. Russia also joined the Wassenaar 

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

Assistant Secretary of State for Nonproliferation stated that Russia’s 

implementation and enforcement of its export controls remain a cause of 

concern. An unclassified January 2002 report by the Director of Central 

Intelligence stated that passing export control legislation will have 

little impact on key weaknesses of the Russian export control system, 

such as weak enforcement and insufficient penalties for 

violations.[Footnote 21] According to some U.S. and foreign government 

officials, it is better to have certain countries such as Russia in the 

regimes in order to influence their export controls and behavior or for 

other foreign policy reasons.



* Argentina did not have in place an effective export control system 

when it joined the Wassenaar Arrangement in 1996. Recognizing that 

Argentina did not have export controls over dual-use items and had not 

adopted the Wassenaar Arrangement control list as late as 1999, the 

United States urged Argentina to pass appropriate legislation. 

Argentina eventually passed legislation to adopt dual-use export 

controls, which went into effect in June 2000.



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

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

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

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

had concerns that Belarus was not adequately enforcing certain 

conventional arms-related controls. Regime members sometimes accept or 

reject a particular country’s membership for political reasons, 

according to U.S. and foreign government officials.



Obstacles to Strengthening Export Control Regimes:



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

to strengthen the multilateral export control regimes. First, and most 

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

requirement to reach consensus among all members about every decision 

made and by the inability to enforce compliance with commitments in 

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

of technological change and the growing trade of sensitive items among 

WMD proliferators complicates efforts to harmonize export controls and 

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

or agreed-upon criteria for assessing regimes’ effectiveness.



Need for Consensus and Voluntary Nature of Regimes Limit Prospects for 

Change:



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

stressed that the regimes are consensus-based organizations and depend 

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

However, regimes have found it especially difficult to reach consensus 

on such issues as making changes to procedures and control lists and 

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

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

with regime commitments cannot be enforced because the multilateral 

export control regimes are voluntary, nonbinding groups.



Consensus Process Makes Decision-Making Difficult:



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

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

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

Wassenaar Arrangement--according to several nonproliferation experts. 

These issues included broadening information in denial notifications 

and obtaining greater transparency into deliveries of small arms and 

light weapons. One government stated that it is easier to reach 

consensus in the Australia Group because Russia is not a member. On the 

other hand, State and Commerce Department officials said that the need 

for consensus-based decision-making can work to the U.S. advantage 

because it prevents a regime from adopting proposals that the United 

States might oppose.



The regimes also have found it difficult to reach consensus on 

designating countries that could be targets of the regimes and, 

therefore, would not receive exports listed on the regimes’ control 

lists. Some members support the idea of designating target countries 

and have proposed countries to be named, while other members disagree. 

For example, repeated efforts by Wassenaar Arrangement members to 

identify specific countries of concern or even regions of unrest have 

failed because of a lack of consensus. Instead, each regime member 

determines which countries are of concern to it when implementing its 

national export controls. Nonetheless, according to the Department of 

State, there is broad agreement that states whose behavior is a cause 

for serious concern--Iran, Iraq, Libya, and North Korea--will be dealt 

with firmly by Wassenaar members.



As an alternative to designating regime targets, the Nuclear Suppliers 

Group has established conditions for supply of nuclear and nuclear-

related, dual-use items. For example, members of the regime have agreed 

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

place a full scope safeguards agreement with the International Atomic 

Energy Agency for all facilities in the country and only upon 

assurances that adequate physical protection will be maintained on the 

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

effect become targets of the regime.



Regimes Lack Means to Enforce Compliance with Commitments:



The Under Secretary of State for Arms Control and International 

Security stated in May 2002 that U.S. nonproliferation policy goals are 

to stop the development of WMD and ensure compliance with existing arms 

control and nonproliferation treaties and commitments. Noncompliance 

can undermine the efficacy and legitimacy of these regimes, according 

to the Under Secretary.



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

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

diplomatic pressure to influence compliance or the occasional 

intelligence information from member states to identify activities that 

might be inconsistent with regime commitments. According to the 

Department of State, in the most clear and serious example of a 

violation of regime nonproliferation commitments, Russia shipped 

nuclear fuel to the Tarapur power reactors in India in January 2001. As 

a Nuclear Suppliers Group member, Russia is committed to refraining 

from nuclear cooperation with any country that lacks comprehensive 

International Atomic Energy Agency safeguards on all its nuclear 

facilities. India, which has a nuclear weapons program, does not have 

such safeguards on all its facilities, although it does have safeguards 

on the Tarapur reactors. Although Russia justified the fuel supply to 

Tarapur based on a safety exemption to this commitment, 32 of 34 

Nuclear Suppliers Group members declared at a special meeting in 

December 2000 that this shipment would be inconsistent with Russia’s 

commitments to the Nuclear Suppliers Group. The fuel transfer occurred, 

nonetheless. Several countries and the European Union sent demarches 

(diplomatic notes) to Russia protesting the sale. The Department of 

State issued a February 2001 public statement that “condemned Russia’s 

disregard of its Nuclear Supplier Group commitments and urged Russia to 

live up to its nonproliferation obligations.”:



Based on publicly available information, we found examples of other 

questionable exports by Russia involving nuclear exports to Iran and 

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

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

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

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

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

proposed exports were consistent with regime commitments.



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

compliance with regime commitments cannot be enforced for several 

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

to apply the concept of enforcement to informal political commitments, 

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

regimes are sometimes vague or left to the interpretation of each 

member state. Third, officials of several governments stated that it is 

difficult to identify when a foreign government is not complying with 

its commitments because knowing whether an illicit technology transfer 

occurred with or without prior government knowledge is sometimes 

impossible. Fourth, it is difficult to encourage countries to comply 

with their regime commitments because there is disagreement over which 

states are countries of concern, according to some foreign government 

officials.



Technological Change and Growing Supply of Sensitive Items from 

Proliferators Complicates Efforts to Harmonize Export Controls:



The rapid pace of technological change in a globalized world economy 

complicates efforts to keep control lists current because these lists 

need to be updated more frequently. The current world economy is 

characterized by rapid technological innovation, globalization of 

business, and the internationalization of the industrial base, 

according to a 2001 study.[Footnote 22] The globalization of defense 

and commercial production activities has made advanced military 

capabilities and related commercial goods and technologies more widely 

available to many countries or subnational groups. This has narrowed 

the technology gap between the United States and other 

nations.[Footnote 23]



Rapidly evolving technologies have particularly impacted such areas as 

high-performance computers, semiconductor manufacturing, and 

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

foreign government officials said that legislative or regulatory 

changes modifying or removing items from control lists that no longer 

can be effectively controlled cannot keep pace with rapid technology 

changes. As a result, the Wassenaar Arrangement, which seeks to control 

items in these technologies, has experienced prolonged discussion and 

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

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

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

cruise missiles and unmanned aerial vehicles, allowing some members to 

seek controversial cruise missile sales to nonmembers.



In addition, the trade of controlled items among nonmember countries 

with indigenous WMD programs undermines regime efforts to effectively 

restrict the exports of sensitive goods and technology. Government 

officials of each of the regimes expressed their concern over 

“secondary proliferation,” the growing capability of proliferators to 

develop WMD technologies and trade them with other countries of 

concern. Traditional recipients of WMD and missile technology such as 

India, Pakistan, North Korea, and Iran could emerge as new suppliers of 

technology and expertise to countries of concern, according to an 

unclassified 2002 report by the Director of Central Intelligence. They 

are not members of multilateral export control regimes and do not 

adhere to their standards. For example, North Korea has exported 

significant ballistic missile-related equipment, components, 

materials, and technical expertise to countries in South Asia, North 

Africa, and the Middle East, including Iran. In August 2002, the Under 

Secretary of State for Arms Control and International Security called 

North Korea “the world’s foremost peddler of ballistic missile-related 

equipment, components, materials, and technical expertise.” To counter 

this trend, officials of some regime member states expressed a desire 

to have all supplier countries join the regimes to encourage them to 

conform to regime standards and limit the proliferation of sensitive 

technologies. Other officials recognized, however, that such countries 

would not satisfy membership criteria and would run the risk that the 

cohesiveness of like-minded memberships would be eroded.



Lack of Explicit Criteria Poses Obstacles to Strengthening Regimes:



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

contacted, nor the regimes have established explicit criteria for 

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

has an established policy of strengthening the effectiveness of the 

multilateral export control regimes.[Footnote 24] Various U.S. 

government officials, including the President and the under secretaries 

and assistant secretaries of State and Commerce have stated the policy 

in public speeches or in written testimony before Congress. 

Furthermore, while neither these governments nor regimes made any 

evaluation of the regimes’ effectiveness, they have asserted that the 

regimes are effective.[Footnote 25] The importance of developing 

criteria to assess regime effectiveness is underscored by the Export 

Administration Act of 2001.[Footnote 26] Pending before the Congress at 

the time of this report, this act would require monitoring of and 

annual reporting on the regimes’ effectiveness.



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

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

First, multilateral export control regimes could not be assessed 

separately from the entire nonproliferation system, including national 

export enforcement systems and treaties. Second, demonstrating the 

effectiveness of the regimes would depend on being able to prove that 

the international community would be worse off without the regimes than 

with them. Third, several government officials and industry 

representatives noted that the mission, obligations, and political 

commitment of the Wassenaar Arrangement are not as clear as those of 

the other regimes. Thus, assessing the effectiveness of this regime 

would be especially problematic.



Notwithstanding these possible limitations to an effort to assess the 

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

officials have proposed criteria to do so. The proposed criteria 

include the following:



* clarity of each regime’s mission, obligations, and political 

commitment;



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

including denial notifications;



* strength of no-undercut provisions;



* willingness and ability of the regime to adapt its practices and 

common control lists to deal with new proliferation challenges;



* number of participants and level of their participation;



* level of compliance with regime standards;



* existence of guidelines for licensing and enforcement; and:



* criticism from nonmembers--specifically proliferators--as evidence 

of a regime’s effectiveness.



Conclusion:



Strengthening multilateral export control regimes would help them 

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

proliferation of weapons of mass destruction and conventional weapons 

to countries of concern and terrorists. A key function of each regime 

is sharing information related to proliferation. Yet the regimes often 

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

their actions were working as intended. The regimes cannot effectively 

limit or monitor efforts by proliferators to acquire sensitive 

technology without more complete and timely reporting of licensing 

information and without more information on when and how members adopt 

and implement agreed-upon controls. Addressing these deficiencies would 

enhance the regimes’ ability to accomplish their nonproliferation 

goals. However, the consensus-based and voluntary nature of these 

regimes poses organizational and political obstacles to implementing 

needed reforms. In addition, the lack of explicit criteria to assess 

regime effectiveness will make it difficult to determine the success of 

any effort to strengthen the regimes. While the regimes have adapted to 

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

do so may determine whether the regimes remain viable in curbing 

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

coherent strategy to address the regimes’ common weaknesses and 

overcome the organizational and political obstacles to strengthening 

their effectiveness.



Recommendations for Executive Action:



To help the multilateral export control regimes achieve their stated 

goals and objectives, we recommend that the Secretary of State 

establish a strategy to work with other regime members to enhance the 

effectiveness of the multilateral export control regimes. This strategy 

should identify steps regime members should take to:



(1) improve information-sharing by:



* establishing clearly defined standards for reporting export denials 

on a more complete and timely basis;



* sharing greater and more detailed information on approved exports of 

sensitive transfers to nonmember countries; and:



* adopting automated information-sharing systems in the MTCR and 

Australia Group to facilitate more timely information exchanges.



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

more consistently by:



* setting guidelines for when each regime member should adopt control 

list changes into national laws and regulations and making this 

information available to all members;



* tracking when members adopt regime changes into national law and 

regulations and making information on the timing and content of these 

changes available to the membership;



* establishing minimal standards for an effective national export 

control system; and:



* periodically assessing each member’s national export control system 

against these standards and reporting the results of these assessments 

to the regime;



(3) identify potential changes in policies and procedures by:



* assessing alternative processes for reaching decisions,



* evaluating means for encouraging greater adherence to regime 

commitments, and:



* conducting an annual self-assessment of regime effectiveness.



To ensure that the United States is reporting all relevant information 

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

that the Secretary of State report U.S. denials of all export licenses 

for items controlled by a multilateral export control regime at the 

time the exporter is informed of the U.S. government’s intent to deny 

an export license.



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

strengthening the effectiveness of the multilateral export control 

regimes, we also recommend that the Secretary of State establish 

criteria to assess the effectiveness of the multilateral export control 

regimes.



Agency Comments and Our Evaluation:



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

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

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

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

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

State also provided us with technical comments, which we incorporated 

as appropriate.



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

recommendations. Commerce agreed that strengthening the multilateral 

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

In its written comments, the Department of Energy indicated that it had 

no comments on the report. The Department of State said that it will 

give due regard to our recommendation to work with other regime members 

to establish a strategy for enhancing the effectiveness of the 

multilateral export control regimes. State also agreed with our 

conclusion that information sharing of export licensing is an important 

element of regime activity.



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

shortcomings of nonproliferation significance. In fact, our report 

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

with its regime commitments, a matter of major nonproliferation 

significance. Our report also identified several specific weaknesses in 

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

licensing decisions and to implement regime decisions. Weaknesses in 

regime processes undermine the regimes’ effectiveness in meeting 

nonproliferation purposes.



We are sending copies of this report to appropriate congressional 

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

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

available to others upon request. In addition, this report will be 

available at no charge on the GAO Web site at http://www.gao.gov.



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

questions concerning this report. A GAO contact and staff 

acknowledgments are listed in appendix IX.



Joseph Christoff, Director

International Affairs and Trade:



[End of section]



Appendix I: Scope and Methodology:



To describe accomplishments of the multilateral export control regimes, 

we reviewed analyses and documents prepared by the Departments of 

State, Commerce, Defense, the intelligence community, and 

nonproliferation specialists in academia. We also reviewed the database 

of the Monterey Institute for International Studies. Also, we reviewed 

plenary, working group, and information exchange documents of the 

Australia Group, MTCR, Nuclear Suppliers Group, and Wassenaar 

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

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

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

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

Nonproliferation Studies of the Monterey Institute for International 

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

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

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

received written responses to questions we provided to the governments 

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

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

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

the Australia Group in Canberra, Australia; and of the Wassenaar 

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

we interviewed representatives of American companies from the Alliance 

for Network Security, American Electronics Association, Association for 

Manufacturing Technology, American Chemistry Council, and Nuclear 

Energy Institute. We also met with representatives of the International 

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

of the Organization for the Prohibition of Chemical Weapons in The 

Hague, The Netherlands, to identify the relationship between the 

regimes and those organizations.



To assess weaknesses of the multilateral export control regimes, we 

analyzed documents and studies noted above and met with officials and 

representatives of the previously mentioned governments and 

organizations. In addition, we reviewed listings of denial 

notifications for all the regimes and approval notifications for the 

Wassenaar Arrangement to try to identify timeliness and completeness of 

reporting. In trying to identify the amount of time for members to 

report denials to each regime, we learned that the regimes do not 

maintain this data in a manner that allows such an analysis. The 

Department of State confirmed this limitation in July 2002. We analyzed 

and compared both the means and frequency with which regime points of 

contact or secretariats distribute the export denial and, in the case 

of the Wassenaar Arrangement, approval notifications to the membership. 

We also identified which countries have and have not reported export 

denials and the percentages of export denials for each country that has 

reported them. We also reviewed regulations of the governments of the 

United States, Japan, and the European Union to determine the time it 

took to incorporate the most recent changes from the regimes into 

regulations.



To identify obstacles that the United States faces in strengthening the 

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

officials and representatives of the noted governments and 

organizations. We could not fully assess how regime members comply with 

their commitments or how well efforts to encourage compliance work 

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

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

January discussing compliance of countries with various arms control 

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

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

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

review the reports to determine how other countries are complying with 

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

pressure has worked overall to stop questionable transfers of items to 

nonmember countries for two reasons. The Department of State could not 

tell us (1) how many demarches in total the United States has provided 

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

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

State provided us with about 100 demarches concerning questionable 

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

and Commerce indicated that the United States delivered an estimated 

100 demarches to MTCR members alone, in 2001.



We channeled all requests for regime information and documentation 

through the Department of State and experienced significant delays in 

obtaining these documents from the Department. After presenting State 

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

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

about the size of the request. In response to the revised request, one 

State office provided requested documents by December 2001 and was 

prompt in fulfilling our subsequent requests for documents. 

Nonetheless, we continued to experience delays from all other State 

offices in receiving access to documents over the next 7 months. State 

officials attributed these delays to the Department’s time-consuming 

process of reviewing every document multiple times before agreeing to 

provide us with access.



We performed our work from August 2001 to September 2002 in accordance 

with generally accepted government auditing standards.



[End of section]



Appendix II: List of Members of Multilateral Export Control Regimes:



Table 3:



Country: Argentina; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Australia; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Austria; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Belarus; Australia Group: ²; Australia Group: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 1.



Country: Belgium; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: ²; Number of Regimes: 

4.



Country: Brazil; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 2.



Country: Bulgaria; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 3.



Country: Canada; Australia Group: [Empty]; MTCR[A]: ²; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Cyprus; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 2.



Country: Czech Republic; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: Denmark; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Finland; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: France; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: ²; Wassenaar Arrangement: [Empty]; Number of Regimes: 

4.



Country: Germany; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Greece; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Hungary; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Iceland; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 2.



Country: Ireland; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Italy; Australia Group: ²; MTCR[A]: [Empty]; Nuclear Suppliers 

Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of Regimes: 4.



Country: Japan; Australia Group: [Empty]; MTCR[A]: ²; Nuclear Suppliers 

Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of Regimes: 4.



Country: Kazakhstan; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 1.



Country: Latvia; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 1.



Country: Luxembourg; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: Netherlands; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: New Zealand; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: ²; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Norway; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Poland; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Portugal; Australia Group: ²; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Romania; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 3.



Country: Russia; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 3.



Country: Slovakia; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 3.



Country: Slovenia; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: ²; Wassenaar Arrangement: [Empty]; Number of Regimes: 

1.



Country: South Africa; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 2.



Country: South Korea; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: Spain; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Sweden; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Switzerland; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: Turkey; Australia Group: [Empty]; MTCR[A]: [Empty]; Nuclear 

Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; Number of 

Regimes: 4.



Country: Ukraine; Australia Group: ²; MTCR[A]: ²; Nuclear Suppliers 

Group: ²; Wassenaar Arrangement: [Empty]; Number of Regimes: 3.



MTCR[A]: Australia Group Country : : [Empty]; Nuclear Suppliers Group: 

Australia Group Country : : [Empty]; Wassenaar Arrangement: Australia 

Group Country : : [Empty]; Number of Regimes: Australia Group Country : 

: [Empty].



MTCR[A]: Australia Group Country : : [Empty]; Nuclear Suppliers Group: 

Australia Group Country : : [Empty]; Wassenaar Arrangement: Australia 

Group Country : : [Empty]; Number of Regimes: Australia Group Country : 

: [Empty].



Country: United Kingdom; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: United States; Australia Group: [Empty]; MTCR[A]: [Empty]; 

Nuclear Suppliers Group: [Empty]; Wassenaar Arrangement: [Empty]; 

Number of Regimes: 4.



Country: Total; Australia Group: 33; MTCR[A]: 33; Nuclear Suppliers 

Group: 40; Wassenaar Arrangement: 33; Number of Regimes: [Empty].



Legend: :



represents the regimes applicable to each listed country.



[A] Countries pledging to abide by MTCR guidelines include the People’s 

Republic of China, Israel, Romania, and Slovakia.



Sources: Center for International Trade and Security, Nonproliferation 

Export Controls: A Global Evaluation, 2001 and the Australia Group, 

Nuclear Suppliers Group, MTCR, and Wassenaar Arrangement.



[End of table]



[End of section]



Appendix III: Reporting Practices of Multilateral Export Control 

Regimes:



Regime: Australia Group; Denied exports reported: Yes; Expected time 

frames for members 

to report denied exports: No; “No undercut” policy in effect: Yes.



Regime: MTCR; Denied exports reported: Yes; Expected time frames for 

members 

to report denied exports: No; “No undercut” policy in effect: Yes.



Regime: Nuclear Suppliers Group; Denied exports reported: Yes; Expected 

time frames for members 

to report denied exports: No; “No undercut” policy in effect: Yes.



Regime: Wassenaar Arrangement; Denied exports reported: Yes; Expected 

time frames for members 

to report denied exports: Yes[A]; Aggregate denials within 90 days of 

6-month reporting period;; Individual denials within 30 days but no 

longer 

than 60 days from date of denial; “No undercut” policy in effect: No.



[A] The Wassenaar Arrangement calls for two types of export denial 

reporting: export denials in aggregate form for less sensitive (basic) 

items (about 76 percent of items) on the dual-use control list and 

individual export denials for sensitive items (about 24 percent of 

items) on the dual-use control list.



Source: GAO analysis based on guidelines of regimes.



[End of table]



[End of section]



Appendix IV: Comparison of Control Lists of Multilateral Export Control 

Regimes:



Each regime and treaty-related organization maintains lists of 

sensitive items to be monitored and controlled, but the purpose and 

composition of each list differs. The Chemical Weapons Convention list 

of chemicals was intended to be as comprehensive as possible, primarily 

related to countries’ declarations and destruction of their chemical 

weapons; and its provisions on transfers have a different goal from 

that of the Australia Group, according to officials of the Organization 

for the Prohibition of Chemical Weapons. Also, 20 Australia Group 

chemicals are not on the Chemical Weapons Convention list, although 

families of chemicals are listed. Finally, the Chemical Weapons 

Convention list does not focus on chemical equipment and transfers, but 

the Australia Group list does.



Table 4: Regime Control Lists and Items: Australia GroupA:



Description of List Items: * 54 dual-use chemical precursors; * Dual-

use chemical weapons-related production equipment; ; ; ; ; * 94 

pathogens and toxins that affect humans, livestock animals, and/or food 

plants; * Dual-use biological production equipment; Examples of Items 

on the List: Chemical:; * Thiodiglycol; * Reaction vessels, reactors, 

or agitators; * Heat exchangers or condensers; * Multiwalled piping; ; 

Biological:; * Ebola virus; * Bacillus anthracis; * Centrifugal 

separators; * Aerosol inhalation chambers.



[A] The United States had not yet published regulations incorporating 

changes from the June 2002 Australia Group plenary at the time of this 

report. The changes include the addition of eight toxins to the 

biological agents core list. The new total will be 102 once revised 

regulations have been issued.



Source: Australia Group.



[End of table]



Table 5: Regime Control Lists and Items: MTCR:



Description of List Items: MTCR equipment and technology annex:; ; * 

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

missile systems, as well as major subsystems such as rocket stages, 

engines, guidance sets, and reentry vehicles and are rarely licensed 

for export. Transfers of production facilities for Category I items are 

prohibited absolutely. Category II Annex items include other missile 

related components, including cruise missiles and unmanned aerial 

vehicles, not covered in Category I.; Examples of Items on the List: 

Category I--complete missile systems, as well as major subsystems:; * 

Individual rocket stages; * Reentry vehicles; * Solid or liquid fuel 

rocket engines; * Guidance sets; * Thrust vector controls; * Warhead 

safing, arming, fuzing, and firing mechanisms; ; Category II--other 

missile related components:; * Propulsion components; * Propellants and 

constituents; * Propellant production technology and equipment; * 

Missile structural composites: production technology and equipment; * 

Avionics equipment; * Reduced observables technology, materials, and 

devices.



Source: MTCR.



[End of table]



Table 6: Regime Control Lists and Items: Nuclear Suppliers GroupA:



Description of List Items: * Part 1 guidelines provide an annexed list 

(“Trigger List”) of 89 items of nuclear materials and equipment that if 

exported require that the recipient country have in place a full-scope 

safeguards agreement with the International Atomic Energy Agency; ; ; ; 

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

dual-use equipment, materials, and related technology; Examples of 

Items on the List: Part 1--; * Special fissionable material; * Nuclear 

reactors and equipment; * Plants and equipment for reprocessing 

irradiated fuel elements; * Plants and equipment for separation of 

uranium isotopes; ; Part 2--; * Machine tools; * Materials (beryllium); 

* Lasers, laser amplifiers, and oscillators; * Flash x-ray equipment.



[A] The Nuclear Suppliers Group maintains two lists of controlled 

items: a list of items, called the “Trigger List,” whose export would 

require international safeguards to all nonnuclear weapons states; and 

a list of dual-use items. In contrast, the Zangger Committee maintains 

only a Trigger List of items whose export would require international 

safeguards, such as inspections and monitoring equipment, to nonnuclear 

weapons states that have not signed the Nuclear Nonproliferation 

Treaty. In 1971, a group of nuclear supplier countries known as the 

Zangger Committee came together to agree on how to implement and 

consistently interpret their obligations under Article III.2, a 

provision of the Nuclear Nonproliferation Treaty. Memberships of both 

regimes are similar; a significant difference is that China is a member 

only of the Zangger Committee. We did not review the activities of the 

Zangger Committee except as they relate to the Nuclear Suppliers Group.



Source: Nuclear Suppliers Group. :



[End of table]



Table 7: Regime Control Lists and Items: Wassenaar Arrangement:



Description of List Items: * 541 items in Appendix 5 List of Dual-Use 

Goods and Technologies Wassenaar Arrangement List 1; ; ; ; ; ; ; * 196 

items in Munitions List; * 7 items in Appendix 3 Specific Information 

Exchange on Arms; Examples of Items on the List: Dual-use List; * 

General purpose integrated circuits; * Optical fibre communication 

cables, optical fibres and accessories; * Marine acoustic systems, 

equipment, and specially designed components; * Solid rocket propulsion 

systems; ; Munitions List--; * Bombs, torpedoes, rockets, missiles, and 

related equipment and accessories, specially designed for military use; 

* “Military explosives” and fuels, including propellants, and related 

substances; * Vessels of war, special naval equipment and accessories, 

as follows, and components therefore, specially designed for military 

use; * “Aircraft,” unmanned airborne vehicles, aero-engines and 

“aircraft” equipment, related equipment and components, specially 

designed or modified for military use.



Source: Wassenaar Arrangement.



[End of table]



[End of section]



Appendix V: Some Factors Considered in Accepting New Members to 
Regimes:



Groups: Australia Group; Some factors to consider in reviewing 

potential members: * Applicant must demonstrate an established, 

effective, and legally based system of national export controls;; * Be 

a member in good standing of the Biological and Toxins Weapons 

Convention and Chemical Weapons Convention;; * Demonstrated compliance 

with all multilateral treaties banning chemical and biological weapons 

activities..



Groups: MTCR; Some factors to consider in reviewing potential members: 

Whether a prospective new member; * has a legally based effective 

export control system that puts into effect the MTCR Guidelines and 

procedures;; * administers and enforces such controls effectively;; * 

demonstrates a sustained and sustainable commitment to 

nonproliferation;; * would strengthen international nonproliferation 

efforts..



Groups: Nuclear Suppliers Group; Some factors to consider in reviewing 

potential members: * Enforcement of a legally based domestic export 

control system that gives effect to the commitment to act in accordance 

with the Nuclear Suppliers Group Guidelines;; * Ability to supply items 

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

the Nuclear Suppliers Group Guidelines;; * Adherence to the Guidelines 

and action in accordance with them;; * Adherence to and compliance with 

one or more of various nonproliferation treaties, including the Nuclear 

Nonproliferation Treaty or equivalent international nuclear 

nonproliferation agreement;; * Support of international efforts towards 

nonproliferation of WMD and of their delivery vehicles..



Groups: Wassenaar Arrangement; Some factors to consider in reviewing 

potential members: * A state’s adherence to fully effective export 

controls;; * Whether a state is a producer/exporter of arms or 

industrial equipment, respectively;; * A state’s nonproliferation 

policies, control lists, and, where applicable, guidelines of the 

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

adherence to the Nuclear Nonproliferation Treaty, the Biological and 

Toxicological Weapons Convention, the Chemical Weapons Convention and 

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



Sources: Unclassified sources are the State Department Web site http:/

/www.state.gov/t/np/rls/fs/

2001/3528.htm; MTCR Web site http://www.mtcr.info/english/

partners.html; International Atomic Energy Agency Web site http://

www.nuclearsuppliersgroup.org/member.htm; and Wassenaar Arrangement 

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



[End of table]



[End of section]



Appendix VI: Comments from the Department of Commerce:



UNITED STATES DEPARTMENT OF COMMERCE Assistant Secretary for Export 

Administration Washington, D.C, 20230:



October 11, 2002:



Mr. Joseph Christoff:



Director, International Affairs and Trade U.S. General Accounting 

Office Washington, D.C. 20548:



Dear Mr. Christoff:



This is in response to your Septernber 30, 2002 request for Department 

of Commerce comments on the General Accounting Office (GAO) draft 

report entitled Nonproliferation: Strategy Needed to Strengthen 

Multilateral Export Control Regimes We appreciate the opportunity to 

comment on the draft report.



The Department of Commerce agrees that strengthening the multilateral 

export control regimes would serve U.S. national security objectives_ 

The Department of Commerce also agrees with the GAO recommendations 

that improved information sharing, consistent adoption and 

implementation of export control systems, and assessing; ways to 

overcome obstacles to reach decisions as well as enforcing member 

compliance with regime commitments would strengthen the regimes.



The Department of Commerce will continue to work with. the Department 

of State, as well as the Department of Defense and the Department of 

Energy, to implement a coordinated and comprehensive U.S. strategy to 

strengthen the multilateral export control regimes.



Thank you for the opportunity to provide comments on the draft report. 

Our specific comments are enclosed. If you have any furlher questions, 

please do not hesitate to contact me at:



(202) 482-5491, or contact Ms. Julissa Hurtado at (202) 482-8093.



Sincerely,



James J. Jochum:

Assistant Secretary for Export Administration:

Signed by James J. Jochum:



cc: Steve Lord:



Enclosure:



[End of section]



Appendix VII: Comments from the Department of Energy:



Department of Energy National Nuclear Security Administration 

Washington, DC 20585:



October 15, 2002:



Mr. Joseph Christoff Director International Affairs and Trade U. S. 

General Accounting Office Washington, D.C. 20548:



Dear Mr. Christoff.



The General Accounting Office provided the National Nuclear Security 

Administration (NNSA) with a copy of its draft report GAO-03-43, 

“NONPROLIFERATION: Strategy Needed to Strengthen Multilateral Export 

Control Regimes.” We have reviewed the report and understand GAO is 

recommending that the Department of State should establish a strategy 

to strengthen the Multilateral Export Control Regimes. NNSA, on behalf 

of the Department of Energy, appreciates the efforts of the General 

Accounting Office and has no comments to the report as written.



Sincerely,



Anthony R. Lane:

Associate Administrator for Management and Administration:

Signed by Anthony R. Lane:



[End of Section]



Appendix VIII: Comments from the Department of State:



Note: GAO comments supplementing those in the report text appear at the 

end of this appendix.



United States Department of State Washington, D. C.	20520:



OCT:



Dear Ms. Westin:



We appreciate the opportunity to review your draft report, 

“NONPROLIFERATION: Strategy Needed to Strengthen Multilateral Export 

Control Regimes,” GAO-03-43, GAO Job Code 320073.



The Department’s comments are enclosed for incorporation, along with 

this letter, as an appendix to the GAO final report.



If you have any questions regarding this response, please contact 

Pamela Roe, Deputy Director, Office of Chemical, Biological and Missile 

Affairs, Bureau of Nonproliferation on (202) 647-4931.



Sincerely, l:



Christopher B. Burnham:

Assistant Secretary of Resource Management and Chief Financial Officer:

Signed by Christopher B. Burnham:



Enclosure:



As stated.



cc: GAO/IAT - Mr. Christoff State/OIG - Mr. Berman State/NP - Mr. Van 

Diepen:



Ms. Susan S. Westin, Managing Director, International Affairs and 

Trade, U.S. General Accounting Office.



Department of State Comments on GAO Draft Report:



NONPROLIFERATION: Strategy Needed to Strengthen Multilateral Export 

Control Regimes GAO-03-43:



Department of State comments are set forth in detail. Department 

officials are prepared to discuss and elaborate on these comments in 

person at any time.



The Department of State appreciates the opportunity to comment on the 

GAO’s report entitled “Nonproliferation: Strategy Needed to Strengthen 

Multilateral Export Control Regimes.” We were gratified to see that 

GAO’s thorough research into the workings of the four regimes did not 

reveal any shortcomings of nonproliferation significance. Your report 

contained three broad recommendations to help the Secretary of State 

establish a strategy to work with other regime members to enhance the 

effectiveness of the multilateral nonproliferation regimes. We intend 

to give due regard to GAO’s recommendations in the recently-begun 

review of the WMD/missile nonproliferation regimes ordered by the 

President.	Our specific comments to those recommendations follow.



(1) Improving information sharing:



Regarding the report’s conclusion that “regimes cannot effectively 

limit or monitor efforts by countries of concern to acquire sensitive 

technology without more complete and timely reporting of licensing 

information and without information on when and how members adopt and 

implement agreed-upon export controls,” the Department believes that 

the regimes are effectively limiting acquisition of controlled items by 

proliferators. For example, regime-member countries have put in place 

export controls covering listed items. These controls have made an 

important contribution to inhibiting acquisition of WMD and missiles. 

Almost all regime members have national catch-all controls that they 

use to help prevent otherwise non-controlled exports from assisting 

weapons programs. As such, regime members (except for Russia) are not 

significant contributors to proliferation and, in fact, have helped 

delay such proliferation --a central accomplishment of the regimes as 

they currently operate. Instead, proliferators must look to other, non-

regime, suppliers to obtain materials and equipment - often of less 

than optimum quality. In fact, the great majority of acquisition of 

regime-listed items by programs of concern occurs from and between non-

member countries such as China and North Korea.



The report deals extensively with the important role information 

sharing on export licensing decisions plays in efforts to curb the 

spread of WMD and missile equipment and:



technology. The Department believes that another and even more valuable 

aspect of information sharing within the regimes concerns sharing 

information on trends in proliferation, trends in proliferator 

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

concern. Such exchanges sensitize regime members to proliferation 

issues of concern and provide the “big picture” about weapons 

procurement. Officials gain a better understanding about issues of 

priority concern, which lays the groundwork for future cooperation 

through diplomatic channels or other forms of interdiction cooperation 

aimed at impeding specific transfers of concern. While sharing 

information about export licenses is valuable, the broader information 

sharing described above is a large and, in our view, more important 

element of the regimes’ information exchange efforts.



Regarding sharing more complete information on export license denials, 

the Department notes that the AG and MTCR have a standard format for 

denial notifications which ensures uniform data is circulated to regime 

participants. The Department does not necessarily see the 

nonproliferation utility in sharing with regime members information on 

approved U.S. exports of regime-listed items to non-members.



(2) Adopting and implementing agreed-upon regime changes to export 

controls more consistently:



The Department is not aware of any instance in which time lags have 

resulted in proliferators obtaining controlled items from regime 

members as suggested in the report. Also, our expectation, validated by 

long-standing practice, is that regime members share similar concerns 

about the proliferation threat, that they scrutinize export license 

applications for nonproliferation concerns, and that they would be 

alert to the same kinds of concerns in reviewing licenses.



The report also discusses differences found in participants’ 

implementation of regime controls, and questions the effectiveness of 

catch-all controls as a nonproliferation tool. From the Department’s 

perspective, experience shows that the presence of catch-all controls 

has been a critical factor in inhibiting proliferators’ attempts to 

acquire unlisted items; there is no question about their effectiveness. 

Differences in implementation are a necessary result of differences in 

individual countries’ legal and political systems in coping with the 

novel, non-list-based requirements of catch-all controls.



It has been our experience that it is much more important that 

countries have catch-all controls, than they have controls implemented 

exactly the same way.



(3) Identifying potential changes to policies and procedures:



The report takes issue with the consensus decision making process of 

the regimes, asserting that it hampers the adoption of decisions and 

reduces the potential effectiveness of the groups. We would note that 

while achieving consensus in the regimes can be difficult, consensus 

also ensures that ill-conceived proposals that could inadvertently harm 

U.S. interests are not adopted.



In response to the recommendation that the regimes conduct annual 

effectiveness self-assessments, the Department notes that at annual 

plenaries, each regime routinely scrutinizes its relevance, impact, and 

progress in stemming proliferation. Control lists are constantly 

evaluated and updated to take into account trends in proliferation and 

acquisition. The nonprolfieration regimes also routinely discuss (and 

in many cases adopt) a wide variety of policy proposals designed to 

strengthen their effectiveness in fighting proliferation. In effect, 

annual self-assessments already occur, but perhaps not in as systematic 

a manner as the GAO would like to see. However, we intend to give due 

regard to GAO’s recommendations in the recently-begun review of the 

regimes ordered by the President.



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

dated October 16, 2002.



GAO Comments:



1. The Department provided examples of the commitments that governments 

make when they become members of the multilateral export control 

regimes. However, simply listing the types of export control 

commitments these members make says nothing about how these commitments 

are implemented in practice and whether they are effective. Therefore, 

it is unclear how State can contend that regime members are effectively 

implementing regime commitments.



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

suppliers to obtain materials and equipment and discussed this issue in 

our report.



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

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

companies, and end users of concern. We also believe that it is 

important to collect and share comprehensive licensing information on 

sensitive export transfers and denials--the building blocks for 

assessing these broader trends.



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

information about export approvals to nonregime members. This statement 

is inconsistent with its current policy and practice. For example, on 

October 11, 2002, the Deputy Assistant Secretary of State for 

Nonproliferation stated that regime members should share more 

information on export approvals to facilitate monitoring of regime 

member compliance with their “no undercut” commitments. Moreover, the 

U.S. government has led efforts to increase this type of information 

sharing in two regimes. The Wassenaar Arrangement already expects 

members to share information on export approvals, and the U.S. 

government submitted a proposal to the Nuclear Supplier’s Group in 2002 

that would provide for reporting export approvals.



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

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

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

not resulted in proliferators’ obtaining controlled items or that the 

time lags could not contribute to proliferation.



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

inhibiting proliferators’ attempts to acquire items not on regime 

control lists. However, as noted in our report, different country 

standards hamper effective implementation and complicate law 

enforcement cooperation.



7. Our report already acknowledges that decisions based on consensus 

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

hampers the adoption of important decisions, it can also prevent regime 

members from adopting a position that the United States opposes.



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

assessments of regime effectiveness routinely conducted by the regimes 

or their members. Rather, regime statements sometimes assert the 

effectiveness of the regimes but, as we reported, have established no 

agreed upon criteria against which these assertions can be assessed.



[End of section]



Appendix IX: GAO Contact and Staff Acknowledgments:



GAO Contact:



Stephen Lord (202) 512-4379:



Acknowledgments:



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

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

contributions to this report.



GAO’s Mission:



The General Accounting Office, the investigative arm of Congress, 

exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability 

of the federal government for the American people. GAO examines the use 

of public funds; evaluates federal programs and policies; and provides 

analyses, recommendations, and other assistance to help Congress make 

informed oversight, policy, and funding decisions. GAO’s commitment to 

good government is reflected in its core values of accountability, 

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FOOTNOTES



[1] Multilateral export control regimes are referred to as either 

“regimes” or “arrangements,” and the countries invited to participate 

in them are variously referred to as “members,” “participants,” or 

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

refer to participating countries as “members.”



[2] This position was advanced by the Under Secretary for Export 

Administration, Department of Commerce, Bureau of Industry and Security 

(September 18, 2001, and February 26, 2002) and by the Under Secretary 

of State for International Security and Arms Control (May 6, 2002). See 

U.S. General Accounting Office Weapons of Mass Destruction: Assessing 

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

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



[3] The Coordinating Committee for Multilateral Strategic Export 

Controls was created in 1949 to control the transfer of militarily 

useful technology to the Warsaw Pact countries. The end of the Cold War 

in 1989 and the collapse of the Soviet Union in 1992 ended the 

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

Coordinating Committee members agreed to abolish the organization and 

establish a new multilateral regime. In 1996, representatives of the 33 

founding member nations agreed to the Initial Elements of the Wassenaar 

Arrangement on Export Controls for Conventional Arms and Dual-Use Goods 

and Technologies. 



[4] The Zangger Committee, established in 1971 to consider the 

provisions of article III.2 of the Nuclear Nonproliferation Treaty, 

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

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

of the Zangger Committee, except as they relate to the Nuclear 

Suppliers Group. 



[5] Previously, the Nuclear Suppliers Group control list included 

nuclear equipment and material, the export of which would trigger a 

requirement that International Atomic Energy Agency safeguards apply to 

the recipient facility.



[6] Full-scope safeguards are International Atomic Energy Agency 

safeguards on all facilities in a country that receive controlled 

nuclear material and equipment. 



[7] We recognize that regimes also share information on trends in 

proliferation, trends in proliferator procurement, the use of front 

companies and brokers, and end users of concern. Such exchanges 

sensitize regime members to proliferation issues of concern and provide 

the “big picture” about weapons procurement, according to the 

Department of State. 



[8] As part of their “no undercut” policy, three regimes specifically 

oblige their members to consult with members who have denied a license 

before approving a similar export. The Wassenaar Arrangement does not 

include this type of “no-undercut” policy. Thus, members have no 

obligation to consult before exporting items denied by other members, 

but are expected to inform members after they undercut another’s 

denial.



[9] State Department officials indicated that 5 of the 27 export 

denials concerned the same end users in previous notifications to the 

Australia Group. The officials provided written documentation for an 

additional 13 denials showing that they were reviewed for chemical and 

biological weapons proliferation concerns. However, they could not 

explain why these denials were not reported to the regime. 



[10] Data cover different time periods because regimes began reporting 

denial notifications at different times. Members also report denials 

under “catch-all” authority--which allows governments to require 

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

proliferation if exported--but this activity is only voluntary. 



[11] For example, the Nuclear Suppliers Group expects members to report 

denials of items on its Dual-Use Control List. Nuclear Suppliers Group 

guidance states governments should provide “prompt” notification to 

other governments of decisions not to authorize a transfer of 

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



[12] The reporting data that we reviewed covers a period from 1997 

through 2001, before a new electronic information-sharing system became 

operational for most members.



[13] U.S. General Accounting Office, Export Controls: Rapid Advances in 

China’s Semiconductor Industry Underscore Need for Fundamental U.S. 

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



[14] We did not independently assess the operations and effectiveness 

of either the NISS or WAIS systems. Department of State officials told 

us that the WAIS is experiencing certain limitations, but that these 

will be addressed in subsequent modifications to the system.



[15] The European Union adopted December 2000 Wassenaar Arrangement 

changes in March 2001 and the United States adopted these changes in 

the following phases: (1) revisions on microprocessors, graphic 

accelerators, and external interconnects adopted April 9, 2001; (2) 

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

revisions on computers adopted March 8, 2002. 



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



[17] Computer exports to countries that are state sponsors or terrorism 

require a license for computers above 6 MTOPS. 



[18] See U.S. General Accounting Office, Export Controls: More Thorough 

Analysis Needed to Justify Changes to High Performance Computer 

Controls, GAO-02-892 (Washington, D.C.: August 2, 2002).



[19] In 1998, 21 of 29 respondents to a U.S. survey distributed to the 

then-35 Nuclear Suppliers Group members indicated that they had “catch-

all” controls in place. The report noted that at least three of the six 

members that did not respond also had “catch-all” controls. In 1999, 22 

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

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



[20] Foreign Policy Report, 2001 (U.S. Department of Commerce, 

Washington, D.C.)



[21] Unclassified Report to Congress on the Acquisition of Technology 

Relating to Weapons of Mass Destruction and Advanced Conventional 

Munitions, 1 January through 30 June 2001 (Washington, D.C.). The 

report noted that, during 1998 to 1999, the Russian government stated 

that it had obtained convictions for unauthorized technology transfers 

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

in which advanced equipment was described erroneously in export 

documentation and exported, and cases in which enterprises sometimes 

falsely declared goods to avoid taxes.



[22] Study Group on Enhancing Multilateral Export Controls For US 

National Security: Final Report, April 2001 (The Henry L. Stimson 

Center, Washington, D.C.).



[23] We reported on this phenomenon in our report, U.S. General 

Accounting Office, Export Controls: Rapid Advances in China’s 

Semiconductor Industry Underscore Need for Fundamental U.S. Policy 

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



[24] The Under Secretary of Commerce for Industry and Security publicly 

announced in September 2001 that the effectiveness of the regimes would 

be strengthened by 

(1) improving timeliness and content of required reporting, (2) 

adopting a formal denial consultation procedure, and (3) adopting 

“catch-all” controls.



[25] Although the Wassenaar Arrangement has a process for assessing the 

Arrangement every 3 years, its 1999 assessment produced many proposals 

for improving the Arrangement but no evaluation of the arrangement’s 

effectiveness. 



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



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