Trade In Advanced Technology Requires Strategic Trade Control

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Many modern technologies can also be weapons of war and destruction. In World Wars I and II, Germany used technology in wind-up toys to engineer mobile, self-detonating bombs. Household cleaners and detergents have fueled chemical attacks.  What is to stop the advanced imaging technology in a PlayStation to be appropriated for a missile guidance system? How about cyber-warfare software, sub-orbital aerospace vehicles, technology to produce high-end integrated circuits, hybrid machine tools, and lithography equipment? These among 1000 other technologies are subject to controls under the Wassenaar Agreement On Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

Nations have coordinated on strategic trade control for decades for the simple reason that they don’t want technologies and weapons to be used in unintended ways. Ensuring that technological exports go to their intended recipient for the intended purpose creates trust and facilitates commerce and trade. The Wassenaar Arrangement (WA) marks its 25th anniversary next year. The regime has grown from 33 members to 42 today. India joined in 2017. Leadership changes on an annual rotating basis, and the US will chair the General Working Group in 2021. The US representation comprises a delegation from the Departments of State, Defense, and Commerce and relevant industry representatives.

Current Head of the Wassenaar Secretariat, Ambassador Philip Griffiths of New Zealand explains that a “multilateral approach to export controls is more effective than acting alone, both in terms of protecting national and regional security, and in seeking to create a level playing-field for international trade in these items, which is of key importance to exporters.” The earlier Head of the Secretariat Ambassador Sune Danielsson of Sweden observes, “Industry is not against strategic trade control (STC). They want clarity and predictability. Peace and stability are good for business. In fact, STC can facilitate business because the presence of STC reduces risk.” He likens strategic trade control to the international norms for driving. If there were no traffic regulations, you would not be able to drive. While there are specifical national requirements for driving (drivers’ license, speed limits, traffic lights, vehicle registration, seat belts, baby seat and so on), there is an international harmonized system so that people with drivers license in one country can drive in another. This regime facilitate transport and movement, ensures safety, and enables multiple uses for roads like shippers, motorists, and bicyclists, pedestrians.

Similarly, trade in technologies is staggering. Augmented reality glasses, artificial intelligence, facial recognition, and semiconductors are common in consumer technologies but also feature in modern weapons. These “dual use” technologies are regulated to deter their acquisition by unintended parties, to delay the development and proliferation of derivative weapons by unintended parties, to uncover and interdict illegal and illicit transfer of these technologies. Additionally this regime support diplomatic efforts, builds trust among partners, and strengthens the members’ economies through legal trade. Wassenaar’s list of Dual-Use Goods and Technologies contains over 1,000 items in 9 categories, ranging from special materials and related equipment to electronics, computers, telecommunications, information security, sensors and lasers, navigation, aerospace, and propulsion.  Over 170 items are classified as “sensitive” and 80 as “very sensitive”, requiring a more vigilant approach. One key category is semiconductors listing more than 150 end-products and more than 20 types of semiconductor manufacturing equipment.

The selection of dual-use items is based on four main criteria:  (1) foreign availability outside the agreement; (2) the ability to control the export effectively; (3) the ability to make a clear and objective specification of the items; and (4) non-duplication with other export control regimes. Importantly, when items become commonplace or no longer fulfill the requirements, they are removed from the export control list.  

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To keep the Control Lists up to date and relevant the Wassenaar relies on national proposals. Each year Wassenaar working groups engage in intense study and negotiation of the proposals to reach agreement on the need to make changes in the Lists. This process ends with the adoption in December of the changes that have been agreed. 2019 was a particularly busy year at the technical level, as Participating States put forward a record number of Control List proposals, many of which addressed challenging issues. Despite the heavy workload, consisting of some 288 papers, just over half of the 102 national proposals were agreed, some of which had been under discussion for several years. Wassenaar members commit to apply effective export controls at the national level based on the Wassenaar Control Lists, to exchange information and views about the risks associated with transfers of these items, and to report of their own transfers and denials in certain cases.

Ambassador Danielsson observes that the result of the resource intensive work of the Wassenaar and its best-practice guidelines are available free of charge. Many countries which are not Wassenaar members use them, including Singapore, Malaysia, Phillippines, Israel and Hong Kong. Notably, Taiwan cannot join the WA because of its legal status, but Taiwan’s Bureau of Foreign Trade maintains an export control list based on WA. The Wassenaar standards, like those of the other export control regimes for nuclear, biological, and chemical weapons as well as missile technology, are incorporated in the European Union system of export control, creating a pan-European level of strategic trade control.

Strategic trade control does not exist in a vacuum, nor does it alone stop proliferation. Non-proliferation is not possible without strategic trade control. But strategic trade control should be understood within an international policy toolbox including diplomacy, sanctions, preexisting physical safeguards, and other rules and agreements. Not to be confused with disarmament, strategic trade control is about building mutual trust, security, and stability among partners; reducing cost; and limiting damages. Traditional weapons controls are difficult as they require inspectors to verify compliance, and some members fear these inspections because the information gathering could be used against them in a future conflict. There is no such inspection in Wassenaar. The relatively small group relies upon each other’s trust and honor and a highly developed form of consensus.

A critique of some global regimes is that their top-down pronouncements and goals reduce the sovereignty of the people of the member states who do not necessarily have a say. Wassenaar is different in that its governance is bottom up. In fact, Wassenaar itself is not legally binding.  The norms of the Wassenaar must be approved by the people of the nation state itself before they become legally binding in the respective country. The international consensus building supports a nation state process wherein the country itself creates the legal basis for its action (requiring licenses to engage in certain trades and exports), enforcement, education and outreach to industry, and international compliance and adherence. The US has adopted many such export control laws going back to World War II. Most recent is the Export Control Reform Act in 2018, passed in Congress on a wide bipartisan basis, which delegates responsibility to update controls to the Departments of Commerce and State.

Ambassador Griffiths’ term runs through 2023. Hungary will take up the Plenary Chair in 2021.