TRADE RESTRICTIONS: Export Controls
TRADE RESTRICTIONS
Export Controls
Countries maintain export controls to ensure national security, promote for-
eign policy objectives, and prevent the export of certain raw materials that are m sjj0rt suppiy while these controls may be applied to any other country, sales DY industrial countries to HPEs have been most affected, especially those
from the United States. Cuba, Cambodia, Mongolia, and North Korea receive practically no goods from the United States. China, on the other hand, is treated quite leniently, with few procedural requirements and restrictions on only a limited number of products that could be of strategic military importance. The other European and Asian HPEs fall somewhere in between in terms of the severity of U.S. export restrictions. These restrictions include technology exports through licensing and joint venture arrangements and vary by product as well as destination.37 The Office of Export Control maintains a list of products for which special permission must be given before an export license is granted. The licensing requirements apply as well to controlled foreign affiliates of U.S. firms.
Many potential U.S. exporters have argued that, when permission to export certain goods is withheld, HPEs simply buy from other countries or develop technology independently. This argument is sometimes effective in obtaining a license; very often, though, it does not suffice, and groups of American companies estimate that the United States loses large amounts of export sales because of these restrictions.38
The United States, Canada, Japan, Australia, and the thirteen European NATO countries belong to the Coordinating Committee on Multilateral Export Controls (COCOM), which agrees not to export high-technology goods with potential military use to the Eastern bloc. There has been very little dispute on military and atomic-energy products but considerable disagreement on whether civilian sales could have military or strategic applications. The United States, for example, protested the French delivery of a sophisticated telephone exchange to the then Soviet Union. France and the former West Germany, in turn, complained of the 1984 U.S. trade liberalization with the People's Republic of China.39 One of the biggest controversies concerned a West German contract to build the West European-Soviet pipeline.40 As
Western European, U.S., and Japanese firms joined as subcontractors, the United States sought to have the agreement abrogated. The allies refused to do so, and the United States ultimately allowed its firms to participate. Another thorny issue has been that restricted goods (e.g., sophisticated digital computers) have been exported to countries where they can be sold legally and then reexported from those countries to nations where the sale is not allowed by the U.S. government. This led to U.S. export restrictions that worried many firms because of the greater difficulty they had in selling to countries such as Germany, Austria, and Norway. In fact, most U.S. export licenses were sought for goods to other Western countries until 1990, when the U.S. eliminated licenses for sale to allies on all but the most sensitive technologies.41
In 1990 COCOM eased restrictions on high-technology sales to Hungary, Poland, and Czech and Slovak but not to the extent that they eased restrictions with China in 1985. Some COCOM members also wanted the CIS to be treated more leniently; however, changes in COCOM procedures must be approved unanimously, and the United States still feared more of a strategic threat from the Soviet Union than did other COCOM countries. The United States also feared a greater likelihood of transshipment from Eastern Europe than from China to the USSR.42 Several months later the United States barred, on security grounds, U.S. West from building a $500 million fiberoptic cable communications system across the Soviet Union, linking Japan and Europe.
An emerging issue concerns possible transshipment of militarily useful technology to countries such as Iran, Iraq, Syria, and Libya, especially after the costly liberation of Kuwait from Iraq. Many observers believe that China, Eastern Europe, and the newly independent nations within the CIS are not able to monitor the end use of technologies that they export. Or, even if they can, they may be unwilling because of their need for export earnings.
Export controls have also strained relationships between the United States and some other market economies. For example, a Japanese firm, Toshiba, and a Norwegian firm, Kongsberg, exported equipment to the former Soviet Union that the U.S. government thought to be militarily useful. The U.S. Congress then included economic sanctions against Toshiba and Kongsberg (i.e., restricting their sales in the United States) in a trade bill.
Export Controls
Countries maintain export controls to ensure national security, promote for-
eign policy objectives, and prevent the export of certain raw materials that are m sjj0rt suppiy while these controls may be applied to any other country, sales DY industrial countries to HPEs have been most affected, especially those
from the United States. Cuba, Cambodia, Mongolia, and North Korea receive practically no goods from the United States. China, on the other hand, is treated quite leniently, with few procedural requirements and restrictions on only a limited number of products that could be of strategic military importance. The other European and Asian HPEs fall somewhere in between in terms of the severity of U.S. export restrictions. These restrictions include technology exports through licensing and joint venture arrangements and vary by product as well as destination.37 The Office of Export Control maintains a list of products for which special permission must be given before an export license is granted. The licensing requirements apply as well to controlled foreign affiliates of U.S. firms.
Many potential U.S. exporters have argued that, when permission to export certain goods is withheld, HPEs simply buy from other countries or develop technology independently. This argument is sometimes effective in obtaining a license; very often, though, it does not suffice, and groups of American companies estimate that the United States loses large amounts of export sales because of these restrictions.38
The United States, Canada, Japan, Australia, and the thirteen European NATO countries belong to the Coordinating Committee on Multilateral Export Controls (COCOM), which agrees not to export high-technology goods with potential military use to the Eastern bloc. There has been very little dispute on military and atomic-energy products but considerable disagreement on whether civilian sales could have military or strategic applications. The United States, for example, protested the French delivery of a sophisticated telephone exchange to the then Soviet Union. France and the former West Germany, in turn, complained of the 1984 U.S. trade liberalization with the People's Republic of China.39 One of the biggest controversies concerned a West German contract to build the West European-Soviet pipeline.40 As
Western European, U.S., and Japanese firms joined as subcontractors, the United States sought to have the agreement abrogated. The allies refused to do so, and the United States ultimately allowed its firms to participate. Another thorny issue has been that restricted goods (e.g., sophisticated digital computers) have been exported to countries where they can be sold legally and then reexported from those countries to nations where the sale is not allowed by the U.S. government. This led to U.S. export restrictions that worried many firms because of the greater difficulty they had in selling to countries such as Germany, Austria, and Norway. In fact, most U.S. export licenses were sought for goods to other Western countries until 1990, when the U.S. eliminated licenses for sale to allies on all but the most sensitive technologies.41
In 1990 COCOM eased restrictions on high-technology sales to Hungary, Poland, and Czech and Slovak but not to the extent that they eased restrictions with China in 1985. Some COCOM members also wanted the CIS to be treated more leniently; however, changes in COCOM procedures must be approved unanimously, and the United States still feared more of a strategic threat from the Soviet Union than did other COCOM countries. The United States also feared a greater likelihood of transshipment from Eastern Europe than from China to the USSR.42 Several months later the United States barred, on security grounds, U.S. West from building a $500 million fiberoptic cable communications system across the Soviet Union, linking Japan and Europe.
An emerging issue concerns possible transshipment of militarily useful technology to countries such as Iran, Iraq, Syria, and Libya, especially after the costly liberation of Kuwait from Iraq. Many observers believe that China, Eastern Europe, and the newly independent nations within the CIS are not able to monitor the end use of technologies that they export. Or, even if they can, they may be unwilling because of their need for export earnings.
Export controls have also strained relationships between the United States and some other market economies. For example, a Japanese firm, Toshiba, and a Norwegian firm, Kongsberg, exported equipment to the former Soviet Union that the U.S. government thought to be militarily useful. The U.S. Congress then included economic sanctions against Toshiba and Kongsberg (i.e., restricting their sales in the United States) in a trade bill.
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