Ryan Cathie AWS
Implementing Strategic Trade Controls in Myanmar Elements of an Comprehensive and Effective STC System Myanmar - U.S. Nonproliferation Dialogue Naypyidaw, Myanmar November 30, 2017
Presentation Outline • What are Strategic Trade Controls? • Purpose and Benefits of Creating an Strategic Trade Control (STC) System • The International Foundations for STC • Elements of a Comprehensive and Effective STC System • Avenues for STC Implementation Assistance • Summary Observations and Conclusion 2
What are Strategic Trade Controls ? • “Strategic trade controls” or “STC” (often referred to as “export controls”): collectively are the laws, regulations, rules, restrictions, and administrative policies and procedures, that apply to trade and transactions involving items, businesses/individuals, and countries for which there is the possibility the items involved will be used for a weaponsrelated purpose or end-use (i.e. WMD or conventional military). Ø The term “strategic trade control” (aka “strategic trade management”) is more expansive than the term “export control”. STCs are inclusive of other transaction types such as imports, transit and transshipment, brokering/trade facilitation, and technology transfers. 3
What are “Strategic” Items? •
Dual-use items: products, equipment, materials, technologies, parts, and software that have both commercial/civilian and potential weapons/military applications. Ø “WMD dual-use” Ø “Conventional dual-use”
•
Munitions: arms, military equipment, and items specially designed for military use
•
Strategic items: dual-use items as well as other types of export controlled items including arms and military equipment and weapons of mass destruction 4
Purpose and Benefits of an STC System • PURPOSE → To regulate trade with WMD or military applications Ø Support National / Regional Security Ø Promote Foreign Policy Objectives Ø Facilitate Secure Trade and Access to High-Technology Ø Uphold International Obligations and Promote Global Nonproliferation Efforts 5
International Foundations for STC NPT WA
CWC
MTCR
BTWC
UN Sanctions & UNSCR 1540
AG NSG
6
UN Security Council Resolution 1540 • UNSCR 1540 → Chapter VII binding resolution that obligates all member states to create “appropriate and effective” strategic trade control systems Ø Attempts to “fill the gaps” and support the international nonproliferation and STC regime Ø More focused on non-state actor acquisition of “WMD-related materials”
7
Elements of an STC System (1) SCOPE OF CONTROL • Transactions • List-Based Control • Non-List-Based Control LICENSING SYSTEM • Lead Agency/Secretariat • Interagency Review & Technical Experts • Transparency
Must have well-developed:
ENFORCEMENT • Administrative and Criminal • Penalties • Border Security and Customs
•
Legal Basis
•
Institutions
•
Training
•
Implementation
GOVERNMENT-to-INDUSTRY OUTREACH • Education and Training • Tools and Resources • Incentivizing Compliance 8
STC Legal Framework Primary Legislation: Strategic Trade Control Law •
Defines legal purpose (e.g. to uphold national security and international commitments)
•
Codifies restricted or prohibited activities
•
Institutional authorities and defined roles
•
Mandates transparency and confidentiality
•
Transactions subject to control
•
Responsibilities of traders and government
•
Authority to investigate strategic trade-related activities
•
Penalties
9
STC Regulatory Framework Secondary Legislation: Implementing Regulations Function: Provide procedural guidelines for administration and implementation of the primary law.
the
Examples: • Control lists • Lists of restricted/prohibited end-users • Registration requirements • License submission and required documentation • License criteria and conditions • Industry obligations 10
Scope of Control The STC legal basis should define the scope of control and provide jurisdiction over: Ø Transactions Subject to Control – How? Ø Items Subject to Control – What? Ø Places Subject to Control – Where? Ø People Subject to Control – Who? 11
Transactions • Exports • Imports • Re-exports and re-transfers (XT and domestic) • Transits / transshipments • Brokering and trade facilitation (finance, insurance, shipping, etc.) • Intangible transfers of technology (ITT) and ”deemed” exports 12
Items Controlled items include: • Goods • Technology • Information • Services 13
Items: Control List-Based • Control list(s) should specify: Ø Items subject to control Ø Performance capabilities & technical specifications of all items Ø Prohibited end-uses
• Unified list or multiple lists of controlled items ? Ø Can be a single, unified control list; one list for dual-use and one for munitions; or multiple lists divided by type of item (chemical, biological, nuclear, missile, munition) Ø Should be regularly updated and revised to address emerging threats and evolving technologies
• The EU Lists serve as a common template Ø Incorporates all items from the regime lists
14
Items: Non-List Based Controls • “Catch-all” controls are restrictions/requirements imposed on transfers of non-listed items, when the trader knows, should know, or is informed by authorities that the item will or could be used for a WMD or military end-use. • Purpose: to assess the risk of diversion posed by a particular end-user or destination and to limit the potential for transfers that could contribute to the development of WMD or conventional weapons • Effective control of non-listed items relies heavily on industry awareness and having appropriate transaction screening by industry 15
STC Licensing System •
License: the process of authorizing a transaction with potential WMD or military applications
•
Must assess the overall risk of diversion associated with a proposed transaction
•
Government is responsible for: Ø
Designating a lead agency
Ø
Incorporating input from other relevant agencies (IA review)
Ø
Developing procedures to govern the licensing process
Ø
Establishing license requirements and procedures §
•
Review criteria, license types, exemptions, and decision-making process
Ø
Administrative enforcement (PSV, inspections, investigations, and penalties)
Ø
Promoting public awareness and education
Trader is responsible for determining whether a license is required or if the transaction is prohibited by law 16
STC Enforcement There are four types of enforcement: 1.
Administrative (suspension/revocation, fines, confiscation)
2.
Criminal (fines and Imprisonment)
3.
Customs Control
4.
Border Security
Effective enforcement requires government to: •
Designate empowered authorities
•
Coordinate with customs and border security authorities
•
Establish STC-related penalties (account for intent)
•
Successfully prosecute and publicize violations
•
Cooperation and communication with inter-agency actors, industry, technical experts, and foreign government bodies and authorities 17
Government-to-Industry Outreach • Government-to-industry outreach fosters compliance • Government encourages compliance by: Ø Registering entities Ø Providing access to information (laws, regulations, control lists) Ø Providing regular training and seminars Ø Allow for public/industry input and dialogue Ø Encouraging and incentivizing Internal Compliance Programs
• Industry Provides: Ø Technical expertise (classification, end-use, availability, etc.) Ø Information on potentially suspicious end-users or illicit/criminal activity (hotlines and whistleblower protections) Ø Insight on sector or technology developments Ø Consequences of reform 18
Avenues For STC Implementation Assistance (1) •
UN 1540 Requests for Assistance http://www.un.org/en/sc/1540/assistance/general-information.shtml
•
U.S. Export Control and Related Border Security (EXBS) Program; BAFA (Germany); and other governments provide STC training and assistance to support legal-regulatory development, licensing, enforcement, and industry outreach. EXBS also contributes equipment, software, and technology. Ø EXBS website: https://www.state.gov/t/isn/ecc/exportcontrols/exbs/index.htm
•
Non-Governmental Organizations (NGOs) like CSIS, VERTIC, SIPRI, CNS/MIIS, and others provide resources on STC issues and concepts
•
Council for Security Cooperation in Asia Pacific (CSCAP), Japan's Center for Information on Security Trade Control (CISTEC), and the Korea Strategic Trade Institute (KOSTI) work on STC issues throughout Asia 19
Avenues For STC Implementation Assistance (2) •
Many of the MECRs have published best practices, guidelines, handbooks, and other resources that can assist with STC development Ø WA Best Practices: http://www.wassenaar.org/best-practices/
•
WCO STC Enforcement Implementation Guide http://www.wcoomd.org/en/topics/enforcement-and-compliance/instruments-and-tools/guidelines/wcostrategic-trade-control-enforcement-implementation-guide.aspx
•
Consolidated UN Sanctions List https://www.un.org/sc/suborg/en/sanctions/un-scconsolidated-list
•
U.S. Department of Commerce maintains a “Consolidated Screening List” of restricted parties in the U.S. Ø Consolidated Screening List: https://2016.export.gov/ecr/eg_main_023148.asp
•
Numerous countries issue “red flag” indicators, ICP Guidance, and other resources that can serve as an outreach template 20
Summary Observations •
Visible thread and ties across treaties, UNSC resolutions, and regimes that extends to national level and domestic STC implementation.
•
There are established elements to a comprehensive and effective STC system which include: scope of control, licensing, enforcement, and industry outreach.
•
Each element must be supported by a well-conceived legal framework, empowered institutions, a cadre of well-trained officials, and effective implementing mechanisms.
•
There are other partner governments, international institutions, and NGOs that offer STC technical assistance, training, and equipment
•
There are publicly-available resources that can assist the GOM with its STC development and implementation efforts 21
Conclusion and Discussion •
Thank you for your time and attention!
•
I welcome any questions or comments you may have now, or contact me later at: Ryan L. Cathie Research Fellow, Center for Policy Research, University at Albany, State University of New York (SUNY) [email protected]
22
Presentation Outline • What are Strategic Trade Controls? • Purpose and Benefits of Creating an Strategic Trade Control (STC) System • The International Foundations for STC • Elements of a Comprehensive and Effective STC System • Avenues for STC Implementation Assistance • Summary Observations and Conclusion 2
What are Strategic Trade Controls ? • “Strategic trade controls” or “STC” (often referred to as “export controls”): collectively are the laws, regulations, rules, restrictions, and administrative policies and procedures, that apply to trade and transactions involving items, businesses/individuals, and countries for which there is the possibility the items involved will be used for a weaponsrelated purpose or end-use (i.e. WMD or conventional military). Ø The term “strategic trade control” (aka “strategic trade management”) is more expansive than the term “export control”. STCs are inclusive of other transaction types such as imports, transit and transshipment, brokering/trade facilitation, and technology transfers. 3
What are “Strategic” Items? •
Dual-use items: products, equipment, materials, technologies, parts, and software that have both commercial/civilian and potential weapons/military applications. Ø “WMD dual-use” Ø “Conventional dual-use”
•
Munitions: arms, military equipment, and items specially designed for military use
•
Strategic items: dual-use items as well as other types of export controlled items including arms and military equipment and weapons of mass destruction 4
Purpose and Benefits of an STC System • PURPOSE → To regulate trade with WMD or military applications Ø Support National / Regional Security Ø Promote Foreign Policy Objectives Ø Facilitate Secure Trade and Access to High-Technology Ø Uphold International Obligations and Promote Global Nonproliferation Efforts 5
International Foundations for STC NPT WA
CWC
MTCR
BTWC
UN Sanctions & UNSCR 1540
AG NSG
6
UN Security Council Resolution 1540 • UNSCR 1540 → Chapter VII binding resolution that obligates all member states to create “appropriate and effective” strategic trade control systems Ø Attempts to “fill the gaps” and support the international nonproliferation and STC regime Ø More focused on non-state actor acquisition of “WMD-related materials”
7
Elements of an STC System (1) SCOPE OF CONTROL • Transactions • List-Based Control • Non-List-Based Control LICENSING SYSTEM • Lead Agency/Secretariat • Interagency Review & Technical Experts • Transparency
Must have well-developed:
ENFORCEMENT • Administrative and Criminal • Penalties • Border Security and Customs
•
Legal Basis
•
Institutions
•
Training
•
Implementation
GOVERNMENT-to-INDUSTRY OUTREACH • Education and Training • Tools and Resources • Incentivizing Compliance 8
STC Legal Framework Primary Legislation: Strategic Trade Control Law •
Defines legal purpose (e.g. to uphold national security and international commitments)
•
Codifies restricted or prohibited activities
•
Institutional authorities and defined roles
•
Mandates transparency and confidentiality
•
Transactions subject to control
•
Responsibilities of traders and government
•
Authority to investigate strategic trade-related activities
•
Penalties
9
STC Regulatory Framework Secondary Legislation: Implementing Regulations Function: Provide procedural guidelines for administration and implementation of the primary law.
the
Examples: • Control lists • Lists of restricted/prohibited end-users • Registration requirements • License submission and required documentation • License criteria and conditions • Industry obligations 10
Scope of Control The STC legal basis should define the scope of control and provide jurisdiction over: Ø Transactions Subject to Control – How? Ø Items Subject to Control – What? Ø Places Subject to Control – Where? Ø People Subject to Control – Who? 11
Transactions • Exports • Imports • Re-exports and re-transfers (XT and domestic) • Transits / transshipments • Brokering and trade facilitation (finance, insurance, shipping, etc.) • Intangible transfers of technology (ITT) and ”deemed” exports 12
Items Controlled items include: • Goods • Technology • Information • Services 13
Items: Control List-Based • Control list(s) should specify: Ø Items subject to control Ø Performance capabilities & technical specifications of all items Ø Prohibited end-uses
• Unified list or multiple lists of controlled items ? Ø Can be a single, unified control list; one list for dual-use and one for munitions; or multiple lists divided by type of item (chemical, biological, nuclear, missile, munition) Ø Should be regularly updated and revised to address emerging threats and evolving technologies
• The EU Lists serve as a common template Ø Incorporates all items from the regime lists
14
Items: Non-List Based Controls • “Catch-all” controls are restrictions/requirements imposed on transfers of non-listed items, when the trader knows, should know, or is informed by authorities that the item will or could be used for a WMD or military end-use. • Purpose: to assess the risk of diversion posed by a particular end-user or destination and to limit the potential for transfers that could contribute to the development of WMD or conventional weapons • Effective control of non-listed items relies heavily on industry awareness and having appropriate transaction screening by industry 15
STC Licensing System •
License: the process of authorizing a transaction with potential WMD or military applications
•
Must assess the overall risk of diversion associated with a proposed transaction
•
Government is responsible for: Ø
Designating a lead agency
Ø
Incorporating input from other relevant agencies (IA review)
Ø
Developing procedures to govern the licensing process
Ø
Establishing license requirements and procedures §
•
Review criteria, license types, exemptions, and decision-making process
Ø
Administrative enforcement (PSV, inspections, investigations, and penalties)
Ø
Promoting public awareness and education
Trader is responsible for determining whether a license is required or if the transaction is prohibited by law 16
STC Enforcement There are four types of enforcement: 1.
Administrative (suspension/revocation, fines, confiscation)
2.
Criminal (fines and Imprisonment)
3.
Customs Control
4.
Border Security
Effective enforcement requires government to: •
Designate empowered authorities
•
Coordinate with customs and border security authorities
•
Establish STC-related penalties (account for intent)
•
Successfully prosecute and publicize violations
•
Cooperation and communication with inter-agency actors, industry, technical experts, and foreign government bodies and authorities 17
Government-to-Industry Outreach • Government-to-industry outreach fosters compliance • Government encourages compliance by: Ø Registering entities Ø Providing access to information (laws, regulations, control lists) Ø Providing regular training and seminars Ø Allow for public/industry input and dialogue Ø Encouraging and incentivizing Internal Compliance Programs
• Industry Provides: Ø Technical expertise (classification, end-use, availability, etc.) Ø Information on potentially suspicious end-users or illicit/criminal activity (hotlines and whistleblower protections) Ø Insight on sector or technology developments Ø Consequences of reform 18
Avenues For STC Implementation Assistance (1) •
UN 1540 Requests for Assistance http://www.un.org/en/sc/1540/assistance/general-information.shtml
•
U.S. Export Control and Related Border Security (EXBS) Program; BAFA (Germany); and other governments provide STC training and assistance to support legal-regulatory development, licensing, enforcement, and industry outreach. EXBS also contributes equipment, software, and technology. Ø EXBS website: https://www.state.gov/t/isn/ecc/exportcontrols/exbs/index.htm
•
Non-Governmental Organizations (NGOs) like CSIS, VERTIC, SIPRI, CNS/MIIS, and others provide resources on STC issues and concepts
•
Council for Security Cooperation in Asia Pacific (CSCAP), Japan's Center for Information on Security Trade Control (CISTEC), and the Korea Strategic Trade Institute (KOSTI) work on STC issues throughout Asia 19
Avenues For STC Implementation Assistance (2) •
Many of the MECRs have published best practices, guidelines, handbooks, and other resources that can assist with STC development Ø WA Best Practices: http://www.wassenaar.org/best-practices/
•
WCO STC Enforcement Implementation Guide http://www.wcoomd.org/en/topics/enforcement-and-compliance/instruments-and-tools/guidelines/wcostrategic-trade-control-enforcement-implementation-guide.aspx
•
Consolidated UN Sanctions List https://www.un.org/sc/suborg/en/sanctions/un-scconsolidated-list
•
U.S. Department of Commerce maintains a “Consolidated Screening List” of restricted parties in the U.S. Ø Consolidated Screening List: https://2016.export.gov/ecr/eg_main_023148.asp
•
Numerous countries issue “red flag” indicators, ICP Guidance, and other resources that can serve as an outreach template 20
Summary Observations •
Visible thread and ties across treaties, UNSC resolutions, and regimes that extends to national level and domestic STC implementation.
•
There are established elements to a comprehensive and effective STC system which include: scope of control, licensing, enforcement, and industry outreach.
•
Each element must be supported by a well-conceived legal framework, empowered institutions, a cadre of well-trained officials, and effective implementing mechanisms.
•
There are other partner governments, international institutions, and NGOs that offer STC technical assistance, training, and equipment
•
There are publicly-available resources that can assist the GOM with its STC development and implementation efforts 21
Conclusion and Discussion •
Thank you for your time and attention!
•
I welcome any questions or comments you may have now, or contact me later at: Ryan L. Cathie Research Fellow, Center for Policy Research, University at Albany, State University of New York (SUNY) [email protected]
22
