Carl Baker
Strategic Trade Controls: the Basics and Beyond
Carl Baker Pacific Forum CSIS Nonproliferation Dialogue Nay Pyi Taw, Myanmar December 5-6, 2016
Overview
• What are strategic trade controls? • Rationale for implementing an STC system • Elements of a national STC program • Next steps for Myanmar • Implementation assistance
Strategic Trade Controls Defined
• Strategic goods: weapons of mass destruction (WMD), conventional weapons, and related items involved in the development, production, or use of such weapons and their delivery systems • Strategic trade controls (STCs): special government rules, restrictions, and procedures, that apply to trade and activities involving items, businesses/individuals, and countries to protect strategic goods and related technology from diversion, manipulation, theft, and other criminal activities
Established Standards MECR
Est.
No.
Nuclear Suppliers Group (NSG)
1975
48
Control Lists
- Trigger List - Dual-Use List
Chemical Weapons Precursors Dual-use chemical items Dual-use biological items Human and Animal Pathogens and Toxins Plant Pathogens
Guidelines Guidelines for Nuclear Transfers Guidelines for transfers of nuclearrelated dual-use
Australia Group (AG)
1985
42
-
Guidelines for Transfers of Sensitive Chemical or Biological Items
Missile Technology Control Regime (MTCR)
1987
35
- MTCR Annex
MTCR Guidelines
Wassenaar Arrangement (WA)
1995
41
- “List of Dual-Use Items” - Munitions List
Best practices, guidelines and procedures
4
Examples of “Dual Use” Strategic Goods
Source: KAIST, http://ouic.kaist.ac.kr/en/esub02_05
Related terminology and concepts
• Other terminology used to refer to controlling strategic goods • Export controls • Strategic trade management • Security trade controls • Strategic high technology controls • Nonproliferation trade controls • Expanded scope of STC • Transit and transshipment of strategic goods • Re-exports (both domestic and extra-territorial) • Trade brokering and other intermediate activity (financing, transportation) • Intangible transfers of technology (ITT) • Imports (in select cases)
Rationale for Implementing STC System • Responsibility • Nonproliferation-related treaties and conventions • UN Security Council Resolution 1540 and sanctions resolutions • Transparency • Trade activity involving strategic goods • Transit and transshipment facilities • Accountability • Licensing system • Customs empowered through enforcement authority • Reputation • Enhanced security profile for transit/transshipment/re-export • Enhanced risk management profile for high technology manufacturing • Security provider to global nonproliferation community
Elements of a National STC Program • • • • •
Legal Basis Licensing System Enforcement Agents Industry Outreach International Participation
Legal Authorities • Legal purpose
• Protect national security and promote foreign policy interests • Fulfill international WMD nonproliferation commitments
• Jurisdiction over territory, people and transactions • Jurisdiction over strategic items • Authority to implement transparent licensing processes • Documentation requirements • Protection of proprietary information • Authority to investigate and prosecute • Define responsibilities (government and private)
Licensing • • • •
Strategic trade registration requirements Item classification (control lists) Responsible agency License application requirements and procedures • Types of licenses and exceptions • Evaluation criteria • Exporter evaluation • Technical assessment of item • End-user and end-use evaluation (catch-all controls)
• Interagency review process • Post shipment verification
Enforcement
• Establish enforcement scope and jurisdiction • Administrative and criminal violations and matching penalties • Enforcement agencies • • • •
Detection Administrative penalties Criminal penalties Prosecution
• Interagency coordination • Industry involvement
Industry Outreach
• First line of defense and must be involved from the onset • Government support must be transparent • • • •
Access to laws, regulations, and control lists Guidance on licensing procedures Facilitate industry input and dialogue Conduct workshops for different industry sectors and business types
• Promote and facilitate internal compliance programs • Encourages self-regulation • Create incentives for expedited licensing process or bulk licenses • Ensure brokers keep auditable records
International Participation
• UNSCR 1540 Committee • Engagement with international organizations • Nonproliferation-related treaty organizations • World Customs Organizations
• Multilateral Export Control Regimes • Proliferation Security Initiative • ASEAN Political-Security Community Blueprint 2025
• Prevent spread of WMD and means of delivery • Adoption and implementation of effective export controls • Cooperation in maintaining SEA free of CBRNE threats
Next Steps for Myanmar
• STC as a political priority and secure support from national leadership • Establish legal basis: comprehensive legislation or revision to trade law • Interagency committee to lead development of national STC system • Licensing system: assess the extent to which strategic items already may be controlled based on other areas of regulation • Provide information and outreach to industry • Train frontline enforcement agencies on strategic item recognition • Technical guidance and capacity-building assistance from partners
STC Implementation Assistance • UNSCR 1540 Committee
• World Customs Organizations • OPCW
• Multilateral Export Control Regimes • Control Lists • Guidelines
• European Union • United States • VERTIC and other NGOs
Summary
• An effective STC system helps serve multiple national interests from greater security to economic growth • Every element of an STC system is necessary to be effective: • Legal basis provides the foundation for the system • Licensing system screens transactions • Enforcement ensures implementation • Outreach ensures industry compliance • International participation provides a forum for cooperation
• Systems tailored to suit the needs of each country and government
Thank you for your attention
Carl Baker Pacific Forum CSIS Nonproliferation Dialogue Nay Pyi Taw, Myanmar December 5-6, 2016
Overview
• What are strategic trade controls? • Rationale for implementing an STC system • Elements of a national STC program • Next steps for Myanmar • Implementation assistance
Strategic Trade Controls Defined
• Strategic goods: weapons of mass destruction (WMD), conventional weapons, and related items involved in the development, production, or use of such weapons and their delivery systems • Strategic trade controls (STCs): special government rules, restrictions, and procedures, that apply to trade and activities involving items, businesses/individuals, and countries to protect strategic goods and related technology from diversion, manipulation, theft, and other criminal activities
Established Standards MECR
Est.
No.
Nuclear Suppliers Group (NSG)
1975
48
Control Lists
- Trigger List - Dual-Use List
Chemical Weapons Precursors Dual-use chemical items Dual-use biological items Human and Animal Pathogens and Toxins Plant Pathogens
Guidelines Guidelines for Nuclear Transfers Guidelines for transfers of nuclearrelated dual-use
Australia Group (AG)
1985
42
-
Guidelines for Transfers of Sensitive Chemical or Biological Items
Missile Technology Control Regime (MTCR)
1987
35
- MTCR Annex
MTCR Guidelines
Wassenaar Arrangement (WA)
1995
41
- “List of Dual-Use Items” - Munitions List
Best practices, guidelines and procedures
4
Examples of “Dual Use” Strategic Goods
Source: KAIST, http://ouic.kaist.ac.kr/en/esub02_05
Related terminology and concepts
• Other terminology used to refer to controlling strategic goods • Export controls • Strategic trade management • Security trade controls • Strategic high technology controls • Nonproliferation trade controls • Expanded scope of STC • Transit and transshipment of strategic goods • Re-exports (both domestic and extra-territorial) • Trade brokering and other intermediate activity (financing, transportation) • Intangible transfers of technology (ITT) • Imports (in select cases)
Rationale for Implementing STC System • Responsibility • Nonproliferation-related treaties and conventions • UN Security Council Resolution 1540 and sanctions resolutions • Transparency • Trade activity involving strategic goods • Transit and transshipment facilities • Accountability • Licensing system • Customs empowered through enforcement authority • Reputation • Enhanced security profile for transit/transshipment/re-export • Enhanced risk management profile for high technology manufacturing • Security provider to global nonproliferation community
Elements of a National STC Program • • • • •
Legal Basis Licensing System Enforcement Agents Industry Outreach International Participation
Legal Authorities • Legal purpose
• Protect national security and promote foreign policy interests • Fulfill international WMD nonproliferation commitments
• Jurisdiction over territory, people and transactions • Jurisdiction over strategic items • Authority to implement transparent licensing processes • Documentation requirements • Protection of proprietary information • Authority to investigate and prosecute • Define responsibilities (government and private)
Licensing • • • •
Strategic trade registration requirements Item classification (control lists) Responsible agency License application requirements and procedures • Types of licenses and exceptions • Evaluation criteria • Exporter evaluation • Technical assessment of item • End-user and end-use evaluation (catch-all controls)
• Interagency review process • Post shipment verification
Enforcement
• Establish enforcement scope and jurisdiction • Administrative and criminal violations and matching penalties • Enforcement agencies • • • •
Detection Administrative penalties Criminal penalties Prosecution
• Interagency coordination • Industry involvement
Industry Outreach
• First line of defense and must be involved from the onset • Government support must be transparent • • • •
Access to laws, regulations, and control lists Guidance on licensing procedures Facilitate industry input and dialogue Conduct workshops for different industry sectors and business types
• Promote and facilitate internal compliance programs • Encourages self-regulation • Create incentives for expedited licensing process or bulk licenses • Ensure brokers keep auditable records
International Participation
• UNSCR 1540 Committee • Engagement with international organizations • Nonproliferation-related treaty organizations • World Customs Organizations
• Multilateral Export Control Regimes • Proliferation Security Initiative • ASEAN Political-Security Community Blueprint 2025
• Prevent spread of WMD and means of delivery • Adoption and implementation of effective export controls • Cooperation in maintaining SEA free of CBRNE threats
Next Steps for Myanmar
• STC as a political priority and secure support from national leadership • Establish legal basis: comprehensive legislation or revision to trade law • Interagency committee to lead development of national STC system • Licensing system: assess the extent to which strategic items already may be controlled based on other areas of regulation • Provide information and outreach to industry • Train frontline enforcement agencies on strategic item recognition • Technical guidance and capacity-building assistance from partners
STC Implementation Assistance • UNSCR 1540 Committee
• World Customs Organizations • OPCW
• Multilateral Export Control Regimes • Control Lists • Guidelines
• European Union • United States • VERTIC and other NGOs
Summary
• An effective STC system helps serve multiple national interests from greater security to economic growth • Every element of an STC system is necessary to be effective: • Legal basis provides the foundation for the system • Licensing system screens transactions • Enforcement ensures implementation • Outreach ensures industry compliance • International participation provides a forum for cooperation
• Systems tailored to suit the needs of each country and government
Thank you for your attention
