Export Controls:

Extent of DOD Influence on Licensing Decisions

NSIAD-89-155: Published: Jun 6, 1989. Publicly Released: Jul 6, 1989.

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Allan I. Mendelowitz
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Pursuant to a congressional request, GAO reviewed the Department of Commerce's and the Department of Defense's (DOD) roles in the export licensing process for commercial products which could also have a military use.

GAO found that: (1) Commerce and DOD agreed on 90 percent of 10,380 licensing actions for cases completed between June 1987 and June 1988; (2) Commerce followed DOD recommendations to conditionally approve some licensing actions; (3) Commerce denied 71 cases that DOD approved, based on its concerns about diversion or the Department of Energy's concerns about unacceptable nuclear uses; (4) DOD recommendations caused Commerce to change 36 percent of its initial licensing decisions or to place certain restrictions on 36 percent of proposed exports to Soviet bloc countries and China; (5) DOD recommendations on proposed exports to free-world countries had little influence on Commerce's licensing decisions; (6) Commerce applied conditions prohibiting reexport, resale, or transfer in 43 of the 66 free-world cases reviewed, although those conditions restated regulatory requirements or commitments the consignee made during export application; (7) DOD did not consistently consider the reexport prohibition condition necessary, while Commerce did not consistently apply the reexport prohibition condition; (8) Commerce's Bureau of Export Administration had a fiscal year (FY) 1988 budget of $37.47 million and 602 licensing-related staff and referred 10,804 of the 97,450 licensing applications it received during FY 1988 to DOD; and (9) the DOD Defense Technology Security Administration had a FY 1988 budget of $9.78 million and 166 licensing-related staff.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Commerce has reviewed the use of conditions, developed a list of conditions, and is advising exporters through a variety of forums, including the OEC Insider and export licensing seminars.

    Recommendation: The Secretary of Commerce should direct the Under Secretary for Export Administration, in consultation with the Departments of Defense and Energy, to review the necessity of applying procedural conditions and, if they are determined to be necessary: (1) amend the Export Administration Regulations to clearly state U.S. policy and prescribe procedures for the use of commonly used conditions for approving export licenses, especially no resale and no transfer; and (2) prescribe guidelines to ensure that conditions are consistently and correctly applied.

    Agency Affected: Department of Commerce


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