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It has frequently been said that there is a conflict between the
Commerce Department's duty to promote exports and its duty to
regulate them--that Commerce has conflicting missions in the export
field. The licenses to Iraq prove that this is true. Commerce licensed
items that did not meet its export criteria, that it knew would be
diverted from their supposed civilian purposes, and that it knew would
help Iraq's nuclear and missile programs. Commerce even excluded
the State and Energy Departments from the licensing process, in
violation of its own procedures.

The best known example of a federal agency that tried to promote and regulate at the same time is the old Atomic Energy Commission, which had the job of both promoting and regulating nuclear energy until 1974, when Congress decided to split the functions. The Nuclear Regulatory Commission now regulates; the Department of Energy promotes. Everyone agrees that nuclear regulation gained great credibility and effectiveness from this separation.

Congress should now follow this precedent for dual-use licensing. It should take this function away from Commerce and give it to an independent regulatory agency such as the Nuclear Regulatory Commission or to some other department, such as Defense, that has no export promotion function. The Commerce Department, which specializes in trade, is not the place to decide strategic questions. An agency that specializes in national security should have that task. It is essential to recognize that the real significance of dual-use items is strategic, not economic. The number of items on the control list is small; well over 90% of the applications to export them are granted; and the value of the few applications denied is tiny compared to the



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overall value of U.S. foreign trade.

It has been suggested that Congress should create a new agency to handle all export licensing. Such a move would be sound if Congress could insure that industrial interests would not take the agency over, as they have the Commerce Department. Industry would have a great incentive to pack such an agency with personnel loyal to its interests.

It would be safer and more logical to make the Defense Department
the "hub" for controlling all exports relevant to nuclear, chemical,
biological and missile proliferation. Most of the expertise is already in
the Pentagon, and any additional expertise could be transferred from
other agencies and obtained through the national laboratories.
Commerce, which has no substantive expertise on dual-use
technology, should retain only a record keeping function. Commerce
should refer applications to the Pentagon, which would make the final
licensing decision in consultation with the Commerce, Energy, and
State Departments, and with the Arms Control and Disarmament
Agency and the intelligence agencies. This change would put military
experts in charge of exports with military applications.

Impose Congressional oversight

Congress essentially ignored export licensing to Iraq until the invasion of Kuwait. Oversight was entirely lacking during the period preceding the Gulf War. If Congress had looked into what the Commerce Department was doing, Congress would have learned quickly that Commerce was not following the rules. A Congressional reaction might have stopped some of the worst exports from going out.

Congress should now impose an effective form of oversight. A Congressional committee with jurisdiction over national security matters should be given the task of overseeing and evaluating export licensing. That committee could be a subcommittee of one of the Armed Services committees, or of the Governmental Affairs or Government Operations committees, or of the Joint Economic Committee. The committee or subcommittee should receive complete reports on pending or approved licenses and should have sufficient staff to oversee export controls. If necessary, it could receive assistance from the General Accounting Office or the Office of Technology Assessment.

Open export licensing to public view

The other important lesson we can draw from nuclear regulation is the great benefit of making decisions in public. All of the Nuclear Regulatory Commission's export licenses are granted on the public record and in the light of day. This is the main reason why there are no horror stories about U.S. nuclear exports to Iraq. Neither exporters nor regulators want to defend such transactions in public, so they do not happen.



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The Commerce Department's process is secret. Neither Congress nor the public is permitted to examine Commerce licensing in the open. This is true despite the fact that dual-use licenses are supposed to be for civilian items restricted to peaceful use.

Commerce refuses even to confirm the existence of an individual
license application, and refuses to disclose which applications have
been approved after the exports have gone out. Cases come into public
view only when someone inside the government becomes angry
enough to leak them to the press. This means that only the exporters
know which cases are pending, and only the exporters' voices are
heard by the licensing officers when decisions are made. The effects
are to freeze the public and Congress out of the process and to open
the door to the worst forms of private lobbying.

The Commerce Department argues that secrecy is necessary to protect proprietary interests. But the U.S. nuclear industry competes well on the international market despite the openness of NRC regulation.

Congress should now require the Commerce Department to publish quarterly summaries of all dual-use licensing actions. This information already exists in a database. It could be released by pushing a button. The resulting list would be the same as the one that Commerce released in March on Iraq, but would include countries such as Iran, Libya and Syria. The list would only cover licensing actions that have been completed. Pending sales would not be revealed. Congress could accomplish this by amending Section 12(c) of the Export Administration Act, which the Commerce Department now interprets as requiring complete secrecy for dual-use licenses.

The list would also include the name of the exporter. If a company is
ashamed of having sold one of its products to a developing country,
the company should not have made the sale in the first place.
Reputable companies do not object to telling the truth about their
business. If the sales are legitimate, and satisfy the export criteria,
there is no reason to keep them hidden. The decision to license them is
an official government act paid for with tax dollars. Pushing export
licensing into the light of day would encourage the exporters to be
honest, encourage the government to be careful, and allow the public
to find out whether U.S. exports are undermining national security.


Following is a list of the known Iraqi military and nuclear end users that imported sensitive American equipment from 1985 to August 2, 1990, when Iraq invaded Kuwait:

Iraqi Airways: One of the "agents and front companies" that Iraq used for its "arms procurement network," according to the U.S. Treasury Department. In a press release on April 1, 1991, Treasury



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• The procedures by which missile technology exports are

approved are not available to the public. It is widely assumed
that at least the Department of State reviews and approves these
sensitive exports. However, the Department of Commerce
approved at least six exports that appear to be on the missile
technology list with no external review. In one case (B373514),
the Commerce Department approved over a million dollars'
worth of compasses, gyroscopes, and accelerometers without
consulting either the State or Defense Departments. All items in
category 1485 are missile items and should have been referred
to the State Department.

Iraqi Air Force:



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