Administration of export controls


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Administration of export controls
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Library of Congress -- Economics Division
United States -- Congress. -- House. -- Committee on International Relations
U.S. Govt. Print. Off. ( Washington )
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Full Text

94th Congress C 2d Session COXITTEE PRINT



\ f \ ..





JUNE 7, 1976


Digitized by the Internet Archive
in 2013


Introduction --------------------------------------------------------- 1
Statutory purposes and basic provisions -------------------------------- 3
Implementing regulations and guidelines ------------------------------ 6
The making of implementing policy and regulations ---------------- 6
Technical advisory committees -------------------------------- 7
Licensing of exports ---------------------------------------------- 9
Table of general licenses ------------------------------------- 12
National security controls ---------------------------------------- 11
Commodity control list and country groups -------------------- 15
Restrictiveness of controls ------------------------------------ 16
Criteria for issuance of validated licenses ---------------------- 19
Communist countries-security considerations ------------- 19
Free-world countries--diversion considerations ------------ 20
Temporary export controls ------------------------------------ 22
Reexport con-trols -------------------------------------------- 24
Technical data controls --------------------------------------- 26
Foreign policy controls ------------------------------------------- 29
Country-oriented controls ------------------------------------- 29
Commodity-oriented controls ---------------------------------- 30
Short-supply controls --------------------------------------------- 33
Implementation of the export control system -------------------------- 36
Organizational structure of the export control system -------------- 36
Office of Export Administration and related agencies ------------ 36
Office of Export Administration --------------------------- 36
Operating Committee ------------------------------------- 37
Deputy Assistant Secretary level informal working group-- 37 Advisory Committee on Export Control Policy (ACEP) ---- 38
Export Administration Review Board (EARB) ------------ 38
The White House ---------------------------------------- 38
Department of Defense review authority ----------------------- 39
Department of Agriculture authority over agricultural export
controls --------------------------------------------------- 49
International controls by the Coordinating Committee (COCOM) 43
Economic Defense Advisory Committee (EDAC) ----------- 45
Licensing procedure ---------------------------------------------- 46
National security controls ------------------------------------ 46
Licensing divisions --------------------------------------- 46
Policy Planning Division ---------------------------------- 48
Operating Committee ------------------------------------- 49
COCOM ------------------------------------------------- 51
Selected statistics ---------------------------------------- 52
Short supply controls ----------------------------------------- 53
Appeals from license denials -------------------------------------- 55
Enforcement and sanctions --------------------------------------- 57
Enforcement proceedings -------------------------------------- 58
Interrogatories ------------------------------------------ 5 11
Charging letters ------------------------------------------ 59
Hearing Commissioner ------------------------------------ 59
Hearings ------------------------------------------------ 59
Director of the OEA -------------------------------------- 60
Consent orders ------------------------------------------- 60
Criniinal. proceedings -------------------------------------- 60


Sanctions 61
Letter of warning 61
Denial of export privileges --------------------------------61
Civil penalty -------------------------------------------64
Appeals ------------------------------------------------64
Criminal penalty ----------------------------------------65
Enforcement workload 5---------------------------------------6
Appendix A. Export Administration Act of 1969, as amended ----------- 67
Appendix B. Commodity control list (sample page) ---------------------77
Appendix C. Country groups-- -- 78
Appendix D. Office of Export Administration; organization and functions- 79 Appendix E. Export Licenses Approved and Reexports Authorized----- 80 Appendix F. Denial and Probation Orders (sample page)-------------- 82
Appendix G. Sources -----------------------------------------------83



The current United States policy of controlling exports dates back to the early days of World'War II when, in 1940, the President was given the authority to control or curtail exports of munitions and related items in the interest of national defense. Legislation enacted in the intervening years has expanded the scope of these controls both as to the range of items subject to controls and the purposes of controlling their exports. Export controls have been administered by a succession of agencies, but since 1947 the U.S. Department of Commerce has been the agency exercising the controls over the bulk of U.S. exports. Presently this function is administered by the Department's Office of Export Administration (OEA).

Several other U.S. agencies have control over exports of

certain commodities or categories of commodities which for specific reasons an&under specific legislation fall within their jurisdiction rather than within that of the OEA.

Exports of arms, ammunition, and implements of war and of related technical data,..f.or example, are controlled by the Office of Munitions Control of the U.S. Department of State under the authority of section 414 of the Mutual Security Act of 1954; exports of nuclear materials and facilities, and of nuclear technical data are controlled, respectively,


by the Nuclear Regulatory Commission and the Energy Research and Development Administration under the Atomic Energy Act of 1954. These controls have been instituted for reasons of national security.

Export controls based on other considerations (short supply, conservation, general public welfare, and regulation of public utilities) are administered by: (1) the Maritime Administration (U.S. Department of Commerce) over merchant ships under the Shipping Act, 1916; (2) the Department of the Treasury over bronze pennies under the Coinage Act of 1965; (3) the Federal Power Ccmmission over natural gas and electric energy under the Natural Gas Act and the Federal Power Act, respectively; (4) the Drug Enforcement Administration (U.S. Department of Justice) over narcotics and dangerous drugs under the Controlled Substances Export and Import Act; and

(5) the U.S. Fish and Wildlife Service (U.S. Department of the Interior), the National Marine Fisheries Service (U.S. Department of Commerce), and the U.S. Forest Service (U.S. Department of Agriculture) over endangered and threatened species of animal and plant life primarily under the Endangered Species Act of 1973 and also under several other statutes of more limited scope.

This paper will concern itself only with export control functions and operations exercised by the Office of Export Administration; even within that limitation, functions other than control of actual exports of goods and technical data (e.g., administration of the anti-Arab boycott provisions of the Export Administration Act, or


monitoring of exports of commodities potentially in domestic short supply) will not be dealt with.

Statutory purposes and basic provisions I/

The law-under which the OEA exercises its authority to control exports (and at the same time the principal U.S. export control statute) is the Export Administration Act of 1969, as amended (50 U.S.C. App. 2401 2413). In the declaration of policy, contained in section 3 of the Act (50 U.S.C. App. 2402), the Congress expresses

a double purpose:

(A) to encourage trade with all countries with which we have diplomatic-or trading relations, except those
countries with which such trade has been determined
by the President to be against the national interest,
and (B) to restrict the export of goods and technology
which would make a significant contribution to the
military potential of any other nation or nations
which would prove detrimental to the national security
of the United States.

The policy of trade encouragement is a relatively recent facet of export control legislation; in fact, it was first enacted only in 1969 in response to the frequent complaints by the American business community that the export control legislation was overly

--and unnecessarily--restrictive.

1/ It is not the intent of this section to provide a detailed
resume of the entire Export Administration Act but merely to focus on the most important of the export control provisions
The text of the Act appears in Appendix A.

72-380 0 76 2


In the same section, the Congress further sets out three basic purposes for controlling exports by declaring that

[ilt is the policy of the United States to use export
controls (A) to the extent necessary to protect the domestic economy from the excessive drain of scarce
materials and to reduce the serious inflationary impact of foreign demand, (B) to the extent necessary to further significantly the foreign policy of the United
States and to fulfill its international responsibilities and (C) to the extent necessary to exercise the necessary vigilance over exports from the standpoint of their significance to the national security of the
United States.

These three purposes--and the resulting types--of export

control are usually referred to as: short supply, foreign policy, and national security. An additional purpose of export controls was declared by the Congress in 1974, primarily as a reaction to the Arab petroleum embargo of 1973-1974. The declaration of policy, in paragraph (7) of section 3 of the Act, considers export controls also as a tool of last resort in inducing foreign countries to remove their restrictions on U.S. access to supplies they control where such restrictions would bring about U.S. shortages or inflationary pressures, or would be used to influence U.S. foreign policy.

While the detailed implementation of the export control authority, conferred on the President and further delegated to the Secretary of Commerce, has traditionally been left to the discretion of the Executive, expert control legislation of recent years has contained more and more detailed directives as to the administration of the controls. Controls on exports of agricultural commodities, for example, are subject to

the approval by the Secretary of Agriculture; such approval, however, may not be given if the commodity in question is in domestic surplus, except when the President determines that controls are required on national security or foreign policy grounds (Sec. 4(f); 50 U.S.C. App. 2403(f)). In the interest of national security, the Secretary of Defense is given specific authority to review the proposed exports of all goods and technology in certain categories, determined by him as requiring such review, for the purpose of determining whether such exports would significantly increase the military capability of a "controlled" (i.e. communist) country (Sec. 4(h); 50 U.S.C. App. 2403(h)).

In order to assure the broadest participation in the policymaking as well as administrative phases of export control, the statute provides for consultation at various levels with other U.S. agencies and with the interested branches of industry (Sec. 5; 50 U.S.C. App. 2404).

Violations of the provisions of the Act or of any regulation, order, or license issued under the Act, are punishable by civil penalties, including administratively imposed fines, as well as criminal penalties, including fines and/or imprisonment. Criminal penalties are substantially higher for violations involving actual exports to communist countries and for repeated violations (Sec. 6; 50 U.S.C. App. 2405).


Implementing regulations and guidelines

The making of implementing policy and regulations.

The general policy and purpose as well as some additional

procedural detail of export control, set out in the Export Administration Act, are administered in practice through detailed policy and procedures spelled out in Export Administration Regulations (15 C.F.R. 368 399.2), promulgated by the Office of Export Administration. Although officially promulgated by the OEA as the agency responsible for export control, these regulations and additional policy and administrative guidelines are as a rule a joint product of inputs from, and consultation among, a variety of sources concerned with the control of exports. The statute itself (sec. 5; 50 U.S.C. App. 2404) requires that, in the process of establishing new policy guidelines and regulations or modifying the existing ones, there be a broad participation of U.S. Government agencies and of the private industry sector. On the Government side, the technical expertise necessary for the formulation of guidelines comes both from agencies that are primarily interested in promoting exports (in view of the Act's declared policy of encouraging exports) as well asfrom those whose primary task it is to protect the national security or promote the foreign policy aims of the United States by, if need be, preventing or restricting the exports of certain commodities or technical data.


Policy consultations among the U.S. Government agencies take place at various levels from staff to cabinet and may be done either in formally established working groups or in informal exchanges. 'A description of such interagency consultative forums which deal with questions of broader policy as well as--and more often--with decisions concerning individual export control cases, is included in the section on the Organizational structure of the export control system (see p. 36).

Expertise and viewpoints of the private industry are injected into the export control policy making primarily through the various technical advisory committees. These committees, authorized by law (sec. 5(c); 50 U.S.C. App. 2404(c)) and appointed by the Secretary of Commerce for two-year periods, have been set up for the purpose of enabling the interested sectors of the American industry to exercise their advisory role in the administration of export controls. At present, there are in existence seven such committees involving the following industries: computer peripherals, components and related test equipment; computer systems; electronic instrumentation; numerically controlled machine tools; semiconductor manufacturing and test equipment; semiconductors; and telecommunications equipment. The committees include, in addition to the representatives of the industry involved, also those of the Departments of Commerce, Defense, and State, and, when appropriate, other U.S. agencies.


The duty and function of the committees is to advise and

assist any U.S. agency charged with the administration of export controls. The law requires that the committees be consulted in the field of their expertise with respect to questions involving technical matters, worldwide availability and actual utilization of production and technology, and licensing procedures which may affect the level of export controls applicable to the commodities or technical data within their purview. The committees are required to meet at least once every three months unless the chairman determines, in consultation with other members, that a meeting is not necessary.

Within this formal and informal institutional framework, the formulation of regulations and guidelines for export control often is a purposeful action intended to cope with a specific broader or narrower practical situation or achieve a new or different goal in response to a change in overall circumstances. On the other hand, new policy detail may develop as a result of identical repetitive ad hoc decisions in individual cases of the same nature which, in a sense, create a precedent for change in detailed policy. Thus,

the impact of policy-making in the field of export controls can range from a major overhaul of export control regulations, or even statutes, to a minor decision that the severity of controls on the f2xportation of a certain commodity to a certain destination be reduced.


The overwhelming bulk of the regulations involves political controls, i.e.,-controls imposed for reasons of either national security or foreign policy. National security controls overshadow by far foreign policy controls in their importance, scope and impact. Since there is, however, significant overlapping between these two types of control, the regulations make no formal distinction between them, and both are administered as a unit. Quarterly reports on U.S. export controls, however, do contain a separate section on foreign policy controls. In'contrast, economic controls, i.e., short-supply controls, although considerably less extensive and having only a limited scope and impact, are the subject of separate

specific regulations.

Licensing of exports.

The key tool of export controls administered by the Office of Export Administration is the system of export licensing. Every export of commodities or technical data from the United States to a foreign country must be licensed in some way. Exempt from this requirement are, in general, exports to Canada; but even in the case of Canada, some sensitive commodities and technical data are subject to the licensing requirement.

While every exported commodity must be licensed, not every

export requires the same type of license. Licenses fall basically into two categories: (1) general licenses, and (2) validated licenses.


A general license is a general authorization by the Office of Export Administration to export a certain commodity or technical data to a certain destination without the necessity of applying for and obtaining a license document covering that specific transaction. If the export transaction in question is permitted under a general license, it may take place without any paperwork other than the normal trade documentation. A validated license., on the other hand, is a document authorizing the export in question and issued by the OEA on the basis of a formal application by the exporter. The requirement to apply for a validated license applies, in the interest of national security or foreign policy, to certain commodities and technical data if they are to be exported to certain destinations. Some commodities are subject to the validated license requirement if exported to any country, others only if exported to certain (e.g., communist) countries. A validated license is issued if the transaction conforms to the criteria for the approval of validated licenses; otherwise, the application is denied.

A validated license must also be obtained for the exportation of commodities subject to short supply controls.

Exports of commodities or technical data that do not require a validated license take place under one of the several general licenses. Although the bulk of general license commodity exports takes place under general license G-DEST, a license applicable to

normal commercial exports, several other general licenses are in effect permitting the exportation of commodities or technical data in specific transactions of narrowly defined character or under special circumstances. A listing of all general licenses, indicating the types of circumstances and commodities they cover and the country groups for which they may be used, appears in Table 1.

The table is intended to show the variety of general licenses rather than to provide definitive information on the applicability or inapplicability of each general license. Some general licenses which are shown in the table as normally applicable to exports to certain communist countries (mostly groups Q, W, and Y) in certain circumstances do not apply to such countries, and, vice versa, some general licenses normally inapplicable to exports to the same country groups may be used, in special circumstances, for exports to such countries. A detailed description of such exceptions appears in the pertinent regulations, contained in part 371 of the Export Administration Regulations.

National security controls.

Export controls imposed in the interest of national security, that is, controls over exports of strategic or high technology commodities or technical data, take up by far the most extensive and complex portion of export administration regulations and functions.

72-380 0 76 3


Table 1

General Licenses

1 I Speciic
G e n a ies esis eeec
SDeInition or Purpos Type of Commodities Covered i Export
Symbo tion Admini,3tration
__ __ _I_ I__ _ _ _ _ _ I__ _ _ _ _ _ I__ _ RegWatioua
G-DEST .......... Shipments of any commodity Commodities indicated by in- Destinations 371.3
listed on the Commodity formation in Commodity indicated
Control List to any desti- Control List. by infornation for which a vali- nation in
dated license is not re- Comm.. oddity
quired by the information Contro l
in the Commodity Control ListList column titled "Validated License Required for
Country Groups Shown
GIT .............. Intransit shipments ........ All commodities, except cer- C o u i t r y 37lA
tain defined categories. Groups Q, T, V, and
GLV ............. Shipments of limited value.. Commodities valued within C o u n t r y 371.5
the GLV dollar value limits Groups Q, specified in Commodity T, and V. Control List.
BAGGAGE ....... Shipments of personal and Commodities within defined All destina- 371.6(a) household effects, certain general categories not idea- tions. vehicles, and personally- tified by the code letter owned tools of trade. "A," "B," "C," or "IM" following the Export Control
Commodity Number on
Commodity Control List.
Commodities within defined C o u n t r y 371.6 (a) general categories identi- Groups Q, fled by the code letter "A," T, and V. "B," "C," or 'M" following
the Export Control Commodity Number on Commodity Control List.
GLD ............. Shipments of dunnage, in Types of commodities used All destina- 371.8
usual and reasonable quan- for dunnage. tions extitles. cept Country Group
Z (excluding Cuba).
SHIP STORES ... Shipments of ship stores for Food, bunker fuel, and other All destina- 371.9 use on outgoing and im- commodities specified as tions exmediate return voyage of ship stores, with stated ex- cept Counvessels; necessary equip- ceptions. try Group
ment and spare parts for Z.
proper operation of departing vessel.
PLANE STORES.. Shipments of plane stores Food, fuel, and other con- All destina- 371.10 for use on outgoing and modities specified as plane tions eximmediate return trip of stores, with stated excep- cept Counaircraft; necessary equip- tions. try Group
ment and spare parts for Z (excludproper operation of de- ing Cuba).
parting plane.


General License Definition or Purpose Type of Commodities Covered Destina- in Export
Symbol tions Administration
I I I I Regulations
CREW ........... Shipments by members of Clothes, adornments, medi- A I I destina- 371.11
crew of usual and reason- cines, toiletries, food, sou- tions exable kinds and quantities venirs, games, hand tools, cept Counof personal and household and similar personal ef- trv Group effects under prescribed fects; furniture, household Z. conditions. effects, and household furnishings; and their containers.
RCS .............. Shipments to Canadian and Food, fuel, and other com- Country 371.12
U.S. vessels, planes, and modities needed for use by Groups Q, airline installations or or on such carriers. S, T, V, W,
agents located abroad. and Cuba.
GUS ................ Shipments to members -of Commodities within defined All destina- 371.13
U.S. Armed Services and categories. tions.
civilian personnel of U.S.
government for personal
use. Shipments to U.S. government agencies for official use.
GLC ............. Shipments of commercial ve- Civil aircraft. C o u n t r y 371.14(b)
hicles operated by private Groups Q,
or common carriers or cer- T.9 V, W,
tain commercial airlines be- and Cuba.
tween the U.S. and other
Trucks, buses, trailers, rail- C o u n t r y 3 71.14 (c) road rolling stock and Groups Q, other commercial vehicles. T, V, and W.
GTF-US .......... Shipments of commodities Commodities imported for All destina- 371.15
imported for display atex- display at exhibitions or tions exhibitions or trade fairs. trade fairs, under stated cept Counconditions. try Groups
S and Z.
GLR ............. Shipments of commodities re- Specified types of commodi- C o u n t r y 371.17
turned to countries from ties. Groups Q,
which imported d. Shipments T, and V.
of commodities returned to
the country of manufaeture or, the country from
which imported for repair
or overhaul. Shipment for
replacement of defective or
unacceptable commodities.
GIFT ............ Shipments of gift parcels Commodities not identified by All destina- 371.18
from individual donors to the code letter "A," "B," tions exindividuals or to religious, "C," or "X" following the cept Councharitable, or educational Export Control Commodity try Group organizations for use of Number on Commodity Z (excluddonee or donee's immediate Control List, up to a total ing Cuba). family. of $100 in one parcel, ordinarily sent as gifts; such
as food, clothing, medicines,
toiletries, and drugs, with
stated exceptions.


J I f specific
Geea ieeDefinition or Purpose Type of Conamodities Covered iesine Rerence

I__I__I__I Regulations GATS ............ Authorizes departure from Civil aircraft of foreign reg- C 0 u n- t r y 371.19 (a)
U.S. under its own power istry. Groups Q,
of civil aircraft on tern- T, and V,
porar-y sojourn. and Cuba.
Civil aircraft of U. S. regis.. C o u n t ry 3 71.19 (b) try. Groups Q,
Stand V.
GMS............. Shipments of commodities All commodities. C ounit r y
sold by the U. S. Depart- Groups T 1371.20
ment of Defense to a for- and V.
eign government under the provisions of the Mutual Security Act of 1954, P.L. 665, 83rd Congress.
GTDA............ Shipments of generally avail- Technical data generally All destinaable technical data. available to the public, tions. 1379.3
scientific and educational data, and certain data contained in an application for foreign filing of a patent, GTDR............Shipments of restricted tech- Technical data not exportable C o u n t r y
nical data. under General License Groups T 379.4
GTDA but exportable sub- and V. ject to specified restrictions. GTE ............. Temporary exports for use Specified types of commodi- CoQu nt ry 371.22 (b)
abroad and return to ties. Groups T
United States of certain and V.
commodities. Specified types of comrnodi- C o u ni t r y 371.22 (e)
ties not identified by the Groups Q, code letter "A," "B." "C," W, and Y. or "M" following the Export Control Commodity Number on Commodity Control List.


This is not surprising in view of the vital importance and varied aspects of this area of national interest.

In addition to administering the controls over exports of commodities and technical data directly from the United States, the Office of Export Administration also wields control over: (1) reexports of U.S. origin commodities and technical data from one foreign country to another foreign country, (2) incorporation of U.S.-origin parts, components, and other commodities in a foreign country into endproducts intended for export, and (3) in some instances, foreign-produced direct products of U.S.-origin technology. These controls do not extend to exports by foreign subsidiaries, branches, or affiliates of U.S. firms merely because of such affiliation; the U.S. does not, under the Export Administration Act, claim export control jurisdiction over such exports if they are wholly of foreign manufacture, and contain no U.S. materials nor are based on restricted U.S,. technology.

Commodity control list and country groups. The key regulation for the administration of the system of licensing commodity exports is the Commodity Control List (CCL) (15 C.F.R. 399.1). 1/ The list consists of descriptions of individual commodities or larger commodity groups, based on and arranged along the lines of Schedule B-1/ For a sample page of the CCL, see Appendix B.


Statistical classification of domestic and foreign commodities exported from the United States, the U.S. official classification of exports for statistical purposes. It also contains for each entry a letter-code indicating the country group or groups to which the commodity may not be exported without a validated license. There are seven such country groups, including all countries of the world except Canada. l/

Restrictiveness of controls. The restrictiveness of controls varies from group to group. 2/ Arranged in order of increasing controls, the country groups would be ranked as follows:

(1) Group T (countries of the Western Hemisphere, except
Canada and Cuba)

(2) Group V (countries not included in any other group,
except Canada)

(3) Group Q (Romania) (4) Group W (Poland)

1/ A detailed list of country groups appears in Appendix C. 2/ Exports to Canada, which is not included in any of the groups,
are virtually unrestricted.


(5) Group Y.(East European communist countries, except
Poland, Romania, and Y ugoslavia; Laos, Mongolia,
People's Republic of China)

(6) Group S (Rhodesia)

(7) Group Z (North Korea, North and South Vietnam,
Cambodia, Cuba).

Formal differences between some groups, characterized by the number of CCL entries that require a validated license and by applicability of other regulatory provisions, are often negligible. Groups T and V, for instance, do not differ in the number of commodities requiring a validated license but in the fact that, for some commodities, the value limit under general license GLV 1/, authorizing shipments of limited value,. is higher for exports to group T than to group V. Similarly, groups W and Y are no different, at. present, in respect to the validated license requirement for CCL entries, but group W qualifies for some specialized general licenses which do not apply to group Y.,

Exports to group Q require validated licenses for only one CCL entry fewer than to either group W or Y; on the other hand, group Q does qualify for exports-under the limited-value general license GLV (albeit not for as many items by far or as high a value limit as groups-T or V) which is not applicable at all to exports to groups W or Y.

l/ See Table 1 and Appendix B.


There are, likewise, only minor differences between controls on exports to group S and those to group Z.

In practice, then, export controls are administered at three levels of roughly equivalent restrictiveness as measured by the geographic applicability of the validated license requirement: (1) controls on exports of high-technology items to countries of the free world contained in groups T and V (which also includes Yugoslavia), (2) controls on hightechnology exports to most communist countries (groups Q, W, and Y), and (3) controls on virtually all exports l/ to Rhodesia (group S) and to Cuba and some of the minor Far Eastern communist countries (group Z). In addition to the almost total commodity coverage of exports to groups S and Z by the validated license requirement, such licenses are as a rule not approved, resulting in a virtual embargo.

Occasionally, a commodity, when exported to a certain country, is subject to controls that are more restrictive than those applicable, in regard to the same commodity, to the rest of the countries in its country group.

For example, exports of arms, ammunition, and military equipment must be approved by a validated license for export to South Africa and Namibia whereas such license is not required for the exports of the same items to other group V countries. DifferenLiaLions of this type, however, are usually motivated by foreign policy rather than national security consIderations.

1/ ( ommodities to which the validated license requirement does not apply
are: books, periodicals, and most other printed matter; talking-book
phonograph records; news or documentary motion pictures and sound tracks.


Criteria for issuance of validated licenses. Despite significant differences in the validated license requirement between exports to the free world (groups T and V) and those to the communist countries (groups Q, W, Y, and especially Z), even a cursory glance at the CCL shows that a large number of entries which require a validated license for exports to Eastern European communist countries also require such license for exports to the free world; the purpose of the validated license requirement, however, differs in either case. Exports to communist countries are evaluated and licensed according to criteria focused primarily on the intrinsic and/or relative contribution they might make to the military potential of the importing country to the detriment of the U.S. national security; exports to the free world countries, on the other hand, are controLled primarily for the purpose of assuring that the commodity in question will not be diverted to an unauthorized country of destination.

In the process of evaluating each application for a validated license for export to a communist country a number of criteria are taken into consideration before a decision is made to approve or disapprove such license. Some of the more important considerations are:

(1) Is the commodity designed for military purposes? Is the
intrinsic nature of the commodity or data such as to make
it of significant use to the military? Is it currently
used importantly by the military establishments in the West?
-In the country for which it is destined?


(2) If the item has both military and civilian uses, is the
intended end-use peaceful in nature? Is the prospective foreign end-user engaged in peaceful or military-oriented

(3) Does the item incorporate advanced or unique technology
of strategic significance that could be extracted?

(4) Would the item promote the military-industrial base of
the country of destination? Is there a shortage of the
item in the area of destination that affects its military

(5) Are the quantities and types of equipment normal for the
proposed use?
(6) Is the equipment an integral part of a larger package and
therefore unlikely to be used for other than the stated

(7) Are comparable commodities or data available to the country
of destination outside the U.S.? If COCOM controlled, are
they available outside the COCOM countries?

(8) Would significant economic/commercial benefits flow to the
the U.S. from consummation of the transaction?

As far as controls on U.S. exports to country &roups T and V 1/

are concerned, the validated license requirement exists primarily for

the purpose of preventing diversion or transshipment of such exports

to unauthorized destinations. It ought to be mentioned, however, that

while the most important function of antidiversion provisions, indeed,

is one of preventing the flow of U.S.-origin goods and technology

from the free-world countries to the communist countries, they apply

1/ Although controls on groups T and V are treated here within the
context of national security export controls and would also appear
to be in such a category as judged by their ultimate function,
the OEA considers them of the foreign policy variety.


as well to exports from any country that is subject to less restrictive export controls to one more severely controlled (e.g., exports from countries in groups Q, W, or Y to those in groups S and Z).

Antidiversion controls (15 C.F.R. 375) are implemented through the requirement that applications for validated licenses be accompanied: (1) by a certification by the ultimate consignee that the commodity in question will not be transshipped to an unauthorized destination and that the foreign consignee or purchaser is fully aware of his responsibilities for the representations made to the Office of Export Administration and for the disposition of the licensed commodities only in those foreign countries where their disposition has been specifically authorized, or (2) by a certificate issued by the government of the consignee's country in which that government undertakes to exercise legal control over the disposition of the commodities covered.

Applications for U.S. exports of high-technology commodities

that are controlled also internationally through the COCOM system 1/, to any COCOM member (except Canada) and to Austria and Hong Kong, generally (there are exemptions and exceptions) must be accompanied by an International Import Certificate issued by the government of the country of destination; other high-technology exports to the same countries require a Statement by Ultimate Consignee and Purchaser,

l/ More information on COCOM appears on p. 43.


an official form of the OEA. The same Statement must accompany applications for all exports subject to the validated license requirement to all non-COCOM destinations except country group T, Switzerland, and Yugoslavia. High-technology exports to the latter two countries are covered by import certificates issued by the country's authorities (Swiss Blue Import Certificate and Yugoslav End-Use Certificate). Exports to group T countries (Western Hemisphere less Canada and Cuba) do not require such certification.

Exports under validated licenses to countries participating in the International Certificate procedure--regardless of whether such exports themselves require an IC or merely a Statement--may also be subject on a selective basis to a verification of their final destination through a Delivery Verification Certificate (DV). Such certificate is issued by the government of the importer's country after the export has taken place and the commodities have

either entered the export control Jurisdiction of the recipient country or been otherwise accounted for by the importer to his government,

Temporary export controls. In the context of export controls,

temporary exports refer to exports of commodities intended for temporary use abroad and prompt return to the United States, in any event no later than one year after their exportation date. Certain temporary exports are authorized under general license GTE (15 C.F.R. 371.22). Some of the types of exports that may be made under this general license


comprise, in general: (1) commodities of usual and reasonable kinds and in usual and reasonable quantities that a U.S. exporter or his representative needs for his use abroad in an undertaking approved by the OEA, (2) commodities for exhibition and demonstration, but only in country groups T or V, and (3) commodities to be repaired, tested, inspected, or calibrated abroad. Excepted from this rule and requiring validated licensing are commodities related to nuclear weapons, explosive devices, or testing, commodities for surreptitious interception of communications, and an array of sensitive commodities, listed individually in the regulations.

In addition, only those commodities that may be exported in

general trade under license G-DEST to country groups T and V may be temporarily exported under GTE to European communist countries. General license GTE does not apply to any temporary exports to groups S or Z.

Even exports that may be made under GTE must be registered with the OEA; the exporter must also certify that he will comply in full with all provisions and requirements of general license GTE.

In view of the substantive difference in the end-use of a

temporary export and a normal commercial export, the criteria for granting validated license for the former are somewhat laxer than for the latter, and licenses easier to obtain. Nevertheless, validated licenses normally are not approved for temporary exports for the purpose of exhibiting or demonstrating sophisticated commodities in countries


to which commercial export of the same commodities would not normally be approved.

Reexport controls. Controls on exports of commodities

have, thus far, been discussed almost exclusively within the context of direct exports from the United States. As has already been mentioned, the U.S. exercises jurisdiction also over exports of certain commodities of U.S. origin, or containing U.S. technology, from foreign countries to other foreign countries. As a general rule, such reexports are governed by provisions very similar to those controlling direct U.S. exports: items exportable to a foreign country directly from the United States under a general license may also be exported to the same country from another foreign country without a specific authorization from the OEA; commodities requiring a validated license for exportation from the United States, must be specifically authorized by the OEA in writing also for exports from a foreign country (including Canada).

Commodities of U.S. orilia may be reexported in whole or in part from their authorized country of ultimate destAnation without a specific authorization if they may be exported to the new country of destination directly from the United States under any of several general licenses (G-DES1, GLV, SHIP STORES, or PLANE STORES); reexports from Canada may take place if they would be allowed under any general license from the UnUed States; reexports are also generally allowed in certain


other circumstances, included in the regulations on permissive reexports (15 C.F.R. 374.2). All other reexports must be specifically authorized by the OEA; they are also subject to the destination control procedure unless their destination is any country in group T or group V, except Liechtenstein, Singapore, South Africa, South-West Africa (Namibia), Sweden, Switzerland, or Yugoslavia.

U.S. control over commodities exported from the United States and incorporated as parts, components, and materials in foreignmade end-products is similar to control-.over reexports. Prior written authorization is not required from the Office of Export Administration for the incorporation abroad of U.S.-origin parts and components in a foreign-made end-product that will be exported to another country, provided that either the U.S.-origin parts and components, or the end-product if it were of United States origin, could be exported from the United States to the new country of destination under general license G-DEST (15 C.F.R. 376.12).

U.S. controls also apply to certain sensitive foreign-produced direct products of U.S.-origin technical data when such products are to be exported to any communist country (Groups Q, W, Y, and Z) (15 C.F.R. 379.8, .4(e), and .5(e)(1) or (2)). All such exports require a specific authorization by the Office of Export Administration.


Technical data controls. Virtually all of the discussion of

export controls thus far has been focused on exports of commodities. Controls are, however, also applied to exports of technical data, and one part of Export Administration Regulations (15 C.F.R. 379) deals specifically with this aspect of export controls. These controls apply only to technical data that have not been officially assigned a security classification; the export of classified technical data is controlled, depending on their nature, by the Office of Munitions Control or by the U.S. Energy Research and Development


Controls over exports of technical data administered by the Office of Export Administration apply to information of any kind that can be used or adapted for use in the design, production, manufacture, utilization, or reconstruction of national security sensitive articles or materials. Data may be in the form of a model or a prototype, of a blueprint, an operating manual, or even a technical service. Models and prototypes are controlled also as commodities, and their exports are subject to the more restrictive control requirements embodied in the Commodity Control List.

As in the case of commodities, certain narrowly defined types

of technical data require a validated export license to all destinations, including the exports to Canada which are normally not subjectto any kind of licensing requirement, general or validaLed (15 C.F.R. 379.4(c)). Other data may be subject eiLher to a general or a


validated license. There are in effect two general licenses authorizing the exports of technical data: license GTDA, dealing with technical data exportable to all destinations, and license GTDR, dealing with technical data the exports of which are in some way restricted.

General license GTDA (15 C.F.R. 379.3) authorizes the export

to all destinations: (1) of technical data that have been made generally available through media generally accessible to the public,

(2) of scientific or educational information that is not directly and significantly related to design, production, or utilization of industrial processes, and (3) of data contained in an application for the foreign filing of a patent application, filed in accordance with the regular procedure of the U.S. Patent Office.

General license GTDR (15 C.F.R. 379.4) authorizes, under specific circumstances, export of some data that are not exportable under GTDA. No data may be exported under this license to country groups S or Z. GTDR does apply, however, to exports to a country in groups Q, W, or Y: (1) of manuals, instruction sheets, or blueprints directly related to a commodity exported to the same consignee under a general or validated license provided such data are related only to the installation, maintenance, or operation of the commodity and not to its production or construction, and (2) of technical data supporting a bid or offer to sell related to a commodity that is not on the U.S. Munitions List or COCOM controlled, provided the data will not disclose the detailed design, production, or the means of reconstruction

72-380 0 76 5


of the item in question or its product (15 C.F.R. 379.4(b)). A validated license is required for the export to all destinations, except Canada, of technical data related to a number of highly sensitive commodities (mostly machinery and transport and electronic equipment of special types) unless such data are of the two types mentioned earlier as being exportable to groups Q, W, or Y under general license GTDR. On the other hand, technical data related to commodities not included in this special list or data not barred from export to all destinations may be exported to countries in groups T or V under the general license GTDR (15 C.F.R. 379.4(d)).

In the event that technical data relating to a number of

categories of materials and equipment, specifically listed in the regulations (15 C.F.R. 379.4(e)(l)(iii)), are to be exported under general license GTDR, the transaction nevertheless may not take place until the exporter has received from the importer written assurances that such data or the direct product thereof will not be shipped to country group Q, W, Y, or Z (15 C.F.R. 379.4(e)(1)).

As is the case with commodities, technical data are subject also to reexport controls. Regulations controlling the reexport of technical data (15 C.F.R. 379.8) prohibit, in general, the unauthorized reexport of technical data imported from the United States from the authorized country of destination or their export from the United States with the knowledge that the data will be reexported from the country of the original ultimate destination.


Exempt from this rule and permitted under one or the other general license (GTDA or GTDR) are exports of technical data to any new country of destination if such data could be exported to such country directly from the United States under the respective general license. In all other cases, a reexport of technical data must be specifically authorized in writing by the Office of Export


Foreign policy controls.

Export controls imposed for reasons of foreign policy fall into two categories: (1) controls applicable primarily to certain countries, and (2) controls applicable primarily to certain types of commodities. In the first category are controls imposed on exports to North Korea, North Vietnam, South Vietnam, Cambodia, and Cuba. While exports of U.S. commodities to other Communist countries require in the interest of national security a validated license, issued--or denied--by the Office of Export Administration, only to the extent that they are of strategic nature or contain high technology, such a distinction is not made in the case of exports to the above listed five countries, virtually all of which are subject to the validated license procedure (15 C.F.R. 385.1). Similarly, virtually all exports to Rhodesia must be approved by a validated license as part of the embargo imposed by the United States on trade with Rhodesia pursuant to section 5 of the United Nations Participation


Act of 1945 (22 U.S.C. 287c) and in conformity with the United Nations Security Council Resolutions of 1965, 1966, and 1968, calling for economic sanctions against Rhodesia (15 C.F.R. 285.3). In both above listed cases, validated licenses are as a rule denied.

Country-oriented foreign policy controls of limited commodity scope apply in a number of other instances. There is, for example, in effect a U.S. embargo, pursuant to a U.N. Security Council Resolution of 1963, implemented through a validated license requirement with licenses as a rule disapproved, on all shipments of arms, munitions, military equipment, and materials for their manufacture (insofar as these items are under the jurisdiction of the Department of Commerce rather than the Department of State) to the Republic of South Africa and to Namibia (South West Africa) (15 C.F.R. 385.4(a)). Also subject to a validated license requirement are exports to the same two countries of all aircraft, aircraft engines, and certain communication and navigational equipment (some of which may normally be exported to country group V under general license G-DEST) and of fingerprint analyzers.

Exports of aircraft and communication and navigational equipment, some of which are exportable to group V countries under G-DEST, are also subject to a validated license requirement for export to Algeria, Egypt, Iraq, Libya, Syria, and People's Democratic Republic of Yemen.

CommoditZ-oriented foreign-policy export controls, consisting of a validated license requirement, are being applied in regard to crime control and detection instruments and equipment to all Communist


countries except Yugoslavia; one type of commodity in this category, voice print identification or analysis equipment, moreover, requires a validated license for shipments to all foreign destinations except Canada. This type of control was established at the request of the U.S. Department of State because the equipment is considered to have prominent use in the suppression of human rights (15 C.F.R. 376.14; Export Administration Report, Ist quarter 1975, p. 6). In addition, the export of any electronic, mechanical, or other device primarily useful for surreptitious interception of wire or oral communications requires a validated license for all foreign destinations, including

Canada (15 C.F.R. 376.13).

Also within the area of foreign policy controls are special

controls imposed on the exports of certain commodities with nuclear implications. Commodities and technical data specifically designed for the use in designing, developing, or fabricating nuclear weapons or explosive devices, or in devising, carrying out, or evaluating nuclear weapons tests or nuclear explosions are generally under the export licensing jurisdiction of the U.S. Office of Munitions Control or, if they are not weapons, of the Energy Research and Development Administration or the Nuclear Regulatory Commission; the Office of Export Administration, on the other hand, does have control jurisdiction over exports of similar exports that have not been specifically designed or modified for any of the above listed uses, but which the exporter knows or has reason to believe, will be used for such purposes.


Similarly, the OEA has control jurisdiction over exports of any commodity which is in normal commercial use for other purposes but which has been specifically designed or modified for uses related to the testing of nuclear weapons or explosions. If such commodity is destined to a country which is not a signatory of the Limited Nuclear Test Ban Treaty of August 5, 1963, a validated license is required. This requirement applies technically to exports to all destinations, including Canada (15 C.F.R. 378.1).

A further foreign policy control in the nuclear field, exercised by the OEA, is the validated export license requirement involving some two dozen types of commodities designed for specific use in or with nuclear reactors for peaceful purposes. Exports of such commodities to non-nuclear weapon countries that are not signatories of the Nuclear Non-Proliferation Treaty of July 1, 1968 may not be approved unless the country of destination provides the U.S. Government with a certification that it will abide by certain specific restrictions on and safeguards in the use of the commodities in question (15 C.F.R. 378.5).

Foreign policy controls are most often established at the request of the State Department or the Energy Research and Development Administration/Nuclear Regulatory Commission and are, consequently, administered in consultation primarily with those agencies. Occasionally, other agencies such as the Department of Agriculture or of the Treasury may also be involved.


A further foreign policy-motivated function of the Office of Export Administration is the implementation of the anti-boycott provisions of the Export Administration Act and regulations. This function, however, falls outside the scope of this paper and will

not be dealt with in further detail.

Short supply controls.

Short supply controls were a major consideration in the early

administration of the U.S. export controls program dLring World War II and in its aftermath when they were used primarily for allocating scarce resources, available in the United States, among our wartime Allies and, after the war, among the many nations of the world dependent on the United States for their recovery, without jeopardizing domestic requirements for the same resources. Once the need for such wholesale allocations had disappeared, short supply controls were used sporadically, in connection with only selected few commodities, and generally f or limited time periods.

In the recent past, there occurred one major instance of the use of short supply controls when in July, August and September of 1973 quantitative restrictions were in effect on the exportation of over 40 agricultural products. In addition, at various times during the last half-decade, short supply export controls were in effect on copper, nickel,- ferrous scrap, walnut logs, timber, lumber, and veneer, and on cattle hides. Controls imposed in December 1973 on the exportation


of petroleum and petroleum products and some related fuels are the only short supply controls still in effect.

The admi-nistration of short supply export controls is governed

DV sec. 377 of the Export Administration Regulations (15 C.F.R. 377), based on the requirements of the policy expressed in sec. 3(2)(A) of the Act. This statute has a twofold purpose: (1) to protect the domestic economy from the excessive drain of scarce materials, and (2) to reduce the serious inflationary impact of foreign demand for U.S. made goods. Prior to the enactment of the Export Administration Amendments of 1974 (P.L. 93-500; 88 Stat. 1552), the authority to use short-supply export controls as an anti-inflationary tool was somewhat less broad in that it provided for the establishment of such controls only in cases of inflationary threat due to abnormal foreign demand.

The manner of implementing short supply controls may vary depending on the nature and severity of the shortage. At one extreme, it may involve a total embargo on exports (i.e., no licenses at all are issued); at the other, it may consist merely of a requirement that applications for validated licenses must be filed for all exports of the controlled commodity, but no applications are denied.

Generally, short-supply regulations envisage a system of quanritative limitations (quotas), imposed either globally or on a country basis. Within these limits, licenses are issued primarily on the basis of each exporter's participation in the exports of the controlled


commodity during a recent base period; a portion of the quota, however, remains reserved for exporters who do not have a history of participation in this trade. This method of licensing assures historical exporters continued equitable access to export trade without excluding from it any newcomers, and helps maintain a normal, if perhaps reduced, pattern of export trade during periods of domestic short supply (15 C.F.R. 377.1 and .2).

Present short supply controls on petroleum and related products are implemented for most of the short-supply controlled commodities through quantitative quotas set for each importing country; exporters' participation within these quotas is regulated through the issuance of licenses. The few products that are not subject to country quotas are controlled through global licensing.

A procedure closely related to the control of actual exports is export monitoring, usually accomplished through a requirement that export shipments of the monitored commodity be periodically reported to the Office of Export Administration. Monitoring of exports of short-supply sensitive commodities has been a practice of some historical standing; presently it is, moreover, specifically directed 1/ by sec. 4(c) of the Act (50 U.S.C. App. 2403(c)), as added by the 1974

1/ The statute specifically exempts the Secretary of Commerce (in
practice, Office of Export Administration) from the duty of
monitoring agricultural products that are already subject to a
similar reporting requirement, administered by the U.S. Department
of Agriculture.

72-380 0 76 6


amendments. Under this mandate, the Office of Export Administration at present monitors on a monthly basis export shipments and unfilled export contracts for eleven types of fertilizer (15 C.F.R. 376.5).

Implementation of the export control system.

Organizational structure of the export control system.

Office of Export Administration and related agencies. The primary responsibility for the administration of the export control sysLem and the implementation of statutory and regulatory provisions and other operational guidelines is in the hands of the Office of Export Administration by virtue of the authority, vested by the Export Administration Act in the Secretary of Commerce and successively delegated to that Office.

After a recent reorganization 1/, the OEA at present consists

of the Office of the Director and seven operating divisions: Policy Planning; Operations; Compliance; Short Supply; and three licensing divisions: Computer; Capital Goods and Production Materials; and Electronic Equipment. A description of their functions appears in Appendix D. One of the purposes of the March 1976 reorganization was the abolition of a separate Technical Data Division and the incorporation of its functions into the licensing divisions.

1/ Federal Register, v. 41, no. 55, March 19, 1976, p. 11592.


In addition to the OEA, there are several levels of interagency bodies:

a(l) The Operating Committee (OC), composed of senior staff

members of the Departments of Commerce, Defense, State, and Treasury, of the National Aeronautics and Space Administration, and the Energy Research and Development Administration as regular members, and the Central Intelligence Agency as a regular adviser. The OC is chaired by the Department of Commerce representative and meets weekly as the principal interagency formal body through which information, advice, and policy positions from other agencies concerned with export controls are sought and obtained by the Department of Commerce as part of the export control policy making procedure., and which actively participates in the review and approval of applications for validated licenses for significant individual transactions requiring more than routine review.

(2) An informal workinggroup at the Deputy Assistant Secretary level, established recently to deal with policy issues related to export license applications and other matters that cannot be resolved at the OC level. The objective of this informal group is to achieve a more rapid resolution of interagency differences than could be obtained at the next higher formal level (ACEP) where individual items are considered according to a strict schedule which at times may result in delays which can be avoided if the case is resolved in an informal manner.


(3) The Advisory Committee on Export Policy (ACEP), a formal interagency committee at the Assistant Secretary level which is the parent body of the OC and on which the same agencies are represented. The ACEP deals primarily with interagency policy differences that cannot be resolved at a lower level and, consequently, meets less frequently than the OC.

(4) The cabinet level Export Administration Review Board (EARB), consists of the Secretary of Commerce, as its chairman, and the Secretaries of Defense, State, and Treasury (in his capacity as the Chairman of the East-West Trade Board). Other cabinet members are included in the Board's deliberations whenever matters of policy directly connected with their concerns are under consideration. The Board meets infrequently, two or three times a year, and deals with interagency differences in particular export license matters, involving questions of national security or other major policy issues that'cannot be resolved at lower levels and are referred to the Board by its chairman either on his own initiative or upon request of another member or the head of any U.S. agency that has an interest in the matter. The Board is an advisory body and its conclusions are transmitted in the form of recommendations to the Secretary of Commerce to assist him in the administration of export controls.

(5) Highly sensitive problems that cannot be resolved even at the EARB level are referred for final resolution to the White House.


In addition to this vertical hierarchy of policy making and

license review, specifically assigned important roles in the administration of export controls are played by two U.S. agencies and one international body.

Department of Defense review authority. The review by the Secretary of Defense usually referred to as the DOD review, is mandated by section 4(h) of the Export Administraton Act (50 U.S.C. App. 2403(h)), added by the 1974 amendment. The statute requires that any request for a validated license to export to a "controlled" country a commodity which the Secretary of-Defense had determined, in consultation with the administering agency, as warranting such review, be reviewed by the Secretary of Defense in order to determine whetherits exportation would significantly increase the importing country's military capability. Upon such review, the Secretary of Defense may recommend to the President to disapprove such exportation. If the transaction is disapproved by the President, a validated export license may not be issued for it. In the event of Presidential approval, a report to that effect must be submitted

to the Congress.

The "controlled" countries to which this provision applies are

those defined as communist countries in section 620(f) of the Foreign Assistance Act of 1961, as amended (22 U.S.C. 2370(f)). The list includes also Yugoslavia which the Export Administration Regulations


do not include among the countries of the communist bloc.

The fundamental criterion of the basis on which the DOD makes its recommendations as to the approval or disapproval of a hightechnology export is the one stated in the Act: Will the export of the goods or technology in question significantly increase the military capability of a controlled country to the detriment of the national security of the United States? The goal of this review and of the DOD embargo on certain items is not to prevent communist countries permanently from acquiring any particular military capability; the pursuit of such a goal would be unrealistic. Nevertheless, through judicious use of export controls the acquisition of such capability by communist countries can be retarded.

While the statute authorizes the DOD to review a rather large number of exported commodities, the review has been made as simple as possible. Long before the enactment of the 1974 statute, tir Office of Export Administration had in effect a number of arrangements with the Department of Defense for the processing of certain classes of proposed exports without direct consultation with and clearance by the DOD in each transaction. These arrangements--some 63 in all-consisted of delegations of authority by the DOD to the OEA whereby the classes of items involved, although subject to DOD review on a case by case basis, could be licensed for export without direct DOD involvement in view of their general nature which the past experience showed would normally allow them to be approved for export by the DOD.


if reviewed individually. After the enactment of section 4(h), the DOD suspended temporarily all such delegations of authority and examined all applications for exports to controlled countries while conducting an intensive review of the previous arrangements to determine whether they could be renewed in the light of current circumstances. The review showed that almost all of the delegations of authority could be restored, thereby saving the DOD much administrative work and avoiding unnecessary delays in the approval of

licenses by the OEA.

A statute similar to section 4(h), but now for all practical

purposes superseded by the latter, is section 709 of the Department of Defense Appropriation Authorization Act, 1975, which authorizes the Secretary of Defense to review and recommend disapproval of a validated export license for "any goods, technology, and industrial techniques which have been developed in whole or in part as a direct or indirect result of research and development program or procurement programs financed in whole or in part with funds authorized by... any ... Act authorizing funds for the Department of Defense," when such exports are made to a "controlled country" destination and would significantly increase the country's military capability. The Secretary's recommendation is transmitted to the President for his action. If the President disagrees with the Secretary's recommendation and wishes to approve the export, he must submit to Congress a statement to that effect. The President's proposed


approval of the export becomes operative after 60 days of continuous session of the Congress unless the Congress disapproves it in the meantime by a concurrent resolution.

The statute also requires quarterly reports to the Congress by the Secretary of Defense of the implementation of the review provision.

The major points in which this statute differs from section 4(h) of the Export Administraton Act are the following:

(1) This statute applies only to goods or technology that have
been developed or procured with DOD funds; sec. 4(h) applies
to "any proposed export of goods or technology."

(2) While both statutes require the President to submit a
report to the Congress in the event that he disagrees with the Secretary's recommendation to disapprove an
export, sec. 709 provides for Congressional reversal of
the President's decision, and sec. 4(h) does not.

(3) For the purpose of sec. 4(h), "controlled countries" are
those that are listed in 22 U.S.C. 2370(f), i-e-, all
communist countries, including Yugoslavia; sec. 709 lists individually only seven East European communist countries
but can apply also to ''such other countries as may be
designated by the Secretary of Defense."

(4) Under sec. 709, the Secretary of Defense is required to
submit quarterly reports to Congress on the implementation
of his review authority; no such requirement exists under
sec. 4(h).

Department of Agriculture authority over agricultural export

controls. Section 4(f) of the Export Administration Act (50 U.S.C. App. 2403(t)) prohibits the Office of Export Administration from placing export controls on any agricultural commodiLy without the


approval of the Secretary of Agriculture. The Secretary himself is, in turn, prohibited from approving such controls if they would apply to a commodity which is in excess of the U.S. domestic requirements (an agricultural surplus commodity), except when the President determines that the controls are necessary in the interest of national security or foreign policy.

International controls by the Coordinating Committee (COCOM).The Coordinating Committee was established in 1950 as a voluntary multinational organization for the purpose of controlling, in the interest of their mutual security, strategic exports from its member countries to the communist bloc. COCOM consists of Belgium, Canada, Denmark, France, the Federal Republic of Germany, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Turkey, the United Kingdom, and the United States. COCOM and its senior body, the Consultative Group, were created informally, out of practical need, and are not based on a formal treaty or executive agreement.

The continued participation of the United States in COCOM is

based primarily on sec. 301 of the Mutual Defense Assistance Control Act of 1951 ("Battle Act")(22 U.S.C. 1613). The members have no obligation to participate in COCOM or to abide by its recommendations. These recommendations, arrived at in confidential proceedi ngs, become effective only as they are carried out by each member country through its own export controls. The implementation of COCOM's recommendations


by its members, however, is to a large extent assured by the basic rule of COCOM's decisions, namely, that there must be unanimous agreement on all COCOM final recommendations. Thus, a COCOM decision means in effect that each member countryhas decided to exercise the same controls under its own laws.

The key documents for the administration of COCOM controls

are lists of embargoed and controlled items. The so-called International List I, covering strategic equipment and materials of nonmilitary and non-nuclear nature, contains 105 items, the International Munitions List contains 21 items, and the International Atomic Energy List, 23 items. As in the U.S. Commodity Control List, an "item" in an international list may in fact represent a large category of commodities, and a simple comparison of the number of items on an international list with that on a member country's domestic list can be deceptive. Nevertheless, there is substantial general identity between the international munitions and atomic energy lists on the one hand and the U.S. Munitions List and the list of nuclear items controlled by the ERDA and/or NRC on the other. List I commodities can be recognized in the CCL by their being identified by a code letter A immediately following the export control commodity number 1/; these commodities require, within the U.S. export control system, a validated license for all destinations I/ See sample page of the CCL in Appendix B.


except Canada and are subject to the ]ZCIDV procedure. l/ The COCOM embargoed commodities represent the level of control that all COCOM members have accepted as their minimum level; in addition to these items, each country may--and the United States does--control a broader array of products. 21

Although the COCOM list is in its intent an embargo list, exceptions may be made for individual shipments, approved for export under the export control procedure of a member country, if such country presents a request for an exception through its delegate to COCOM. Requests for exceptions are also subject to the unanimity rule of COCOM, and a proposed export may take place only if all members agree that it does not constitute a security risk.

In its own turn, the United States participates in the approval of COCOM exception requests, submitted by other member countries, through the Economic Defense Advisory Committee (EDAC), U.S. interagency committee at the Assistant Secretary level with membership identical to that of the ACEP, but chaired by the Assistant Secretary of State for Economic and Business Affairs. 3/ If foreign requests

l/ See p. 21-22 above.

2/ CCL items followed by code letter B, for example, require, like
those coded A, a validated license for export to all destinations
except Canada; they are, however, not subject to the IC/Dy procedure which applies only to COCOM controlled commodities.

3/ EDAC with its subordinated working units is the U.S. Government
body charged with the coordination and conduct of the U.S. participation in COCOM in general.


for COCOM exceptions involve commodities which contain U.S. comnponents subject to a U.S. validated license requirement, the request is also--and first--considered by the ACEP. These so-called duallicensing cases occasionally result in disagreements between ACEP and EDAC when the U.S. component is licensed by ACE?, but the foreign country exception request is denied by EDAC.

Licensing procedure.

National Security controls. 1/ The Office of Export Administration receives on a daily average approximately 200 applications for validated licenses falling within the scope of national security controls. Some 90 to 95 percent of these applications cover high technology items the bulk of which are for exports to the free world rather than to communist destinations. After having been registered and entered into the Office's computer system by the Operations Division, an application is assigned to a technician in the appropriate licensing division. The licensing technician reviews the application, concentrating on the function and uses of the commodity involved, its level of sophistication, and any other applicable criteria and guidelines. Routine applications for exports to the free world are approved at this level and issued to the applicant. Applications involving exports to I/ The same procedure applies essentially to foreign policy controls
inisofar as they do not involve an outright embargo.


communist countries, or foreign-policy controlled exports to the free world and Yugoslavia as well as cases requiring further review or documentation are retained within the system.

Additional documentation or information may be needed because the licensing officer may not be sufficiently familiar with the end-user; such information is usually provided by the Export Information Division of the Bureau of International Commerce. Also at this stage, background.information may be sought from intelligence sources or through informal consultations with technicians in other agencies. If the information or documentation appended to the application by the applicant is insufficient for a proper review, additional information is obtained directly from the applicant, or else the application is returned to the applicant without action. In the latter case, the application may be resubmitted accompanied by the required information. l/ Based on all the information gathered at this stage, the technical specifications of the commodity and the transaction in general are evaluated against the guidelines for the purpose of determining the extent of further review required. With the exception of a limited number of applications for exports to communist countries which are approved at this

1/ Applications for validated licenses are at times, although less
frequently, returned without action to the applicant at later
stages of review, especially in cases where the commodity involved
may not be licensable in its current condition but could be approved for export if certain modifications which might be
acceptable to the end-user are made and the application is refiled.

point in the licensing division, applications, accompanied by the documentation and an analysis by the licensing technician, are then forwarded to the Policy Planning Division for further action.

The-Policy Planning Division is the locus where the interagency review, including the statutory DOD review, of an application takes place. If it is determined upon review of a case that a validated license can be issued simply on the basis of the various guidelines established for the OEA by an advisory agency for approval or rejection of applications, covering a wide range of commodities, such approval is given; if, on the other hand, consultation with one or more other agencies appears necessary, the case Iis referred to the interested agencies. If at all possible, and particularly in cases in which only individual agencies may have any interest, the case is resolved through informal referrals to and consultations with the agencies concerned. This is done in order Lo avoid the need for referring the case to a higher level'for formal review which usually takes more time and more paperwork. While the documentation for these informal referrals is not as extensive as for an application formally reviewed by the Operating Committee, it still must contain a memorandum setting forth the details of the transaction, policy considerations, previous approvals, end-use and end-user information, and extensive technical information. If an advisory agency has problems wiLh the transaction, it can request formal review by the Operating Committee.


When a case is of interest primarily to the DOD, rather than to any other agency, and cannot be resolved through informal consultation, a formal referral under section 4(h) is made to DOD alone; in unresolved or otherwise significant cases of interest to several agencies, however, the application is forwarded for formal review by the Operating Committee, and the DOD review takes place as a part of the proceedings of that committee.

Although the process of informal review has shortened what otherwise would have become a really prolonged processing time and has relieved some of the burden on the committee structure in several commodity areas, a substantial number of individual applications for high technology items are still reviewed by the Operating Committee.

A substantial part of the delay brought about by a referral to the Operating Committee is caused by the heavy workload involved in documenting applications that must be reviewed by all the agencies participating in the Committee's deliberations. This documentation includes, as a minimum, the following:

(1) a technical description of the commodities or data

involved and the intended end use;

(2) an evaluation of the strategic significance of the proposed transaction;

(3) information on the foreign availability of comparable

commodities or data;


(4) the licensing history of past applications for like

or similar commodities or data; and

(5) a recommendation for approval or denial, and the rationale

supporting the recommendation.

The gathering of additional facts, some of them hard to come

by, and often consultations on technical aspects with experts within and outside the Government may further delay the preparation of the documentation required by the OC.

Once the documentation on any given transaction is completed, the case is put before the Operating Committee agencies and their advice sought. This advice and the OC chairman's recommendations are forwarded to the Director of the Office of Export Administration for his decision or, in some instances, for referral to the Director of the Bureau of East-West Trade for his decision.

Disagreements among the advisory agencies participating in

the deliberations are referred for review and final advisory resolution to higher formal or informal bodies: the informal working group at the Deputy Assistant Secretary level, the formal ACEP at the Assistant Secretary level, the cabinet level EARB, and, if need be, the President who may act with advice from the National Security Council (NSC) and the Council on International Economic Policy (CIEP). Referrals to higher levels are progressively less numerous,


to the Presidential level virtually nonexistent, according to the OEA officials. l/

At whatever level an agreement as to the approval of a license application is reached, cases involving exports of COCOM embargoed items must also be referred to that body for its approval. Inasmuch as most high-technology items approved for export by the United States are also on the COCOM list, a substantial proportion of U.S.-approved licenses, must be forwarded, accompanied by all the required documentation, through the U.S. delegate to COCOM in the form of an exception request to be approved by other COCOM members.

In accordance with COCOM procedure, the information forwarded from the United States must be transcribed into COCOM format, translated into French, and distributed to the delegates of other member-nations. These delegates, in turn, submit the exception proposal to their governments which review the request through a procedure comparable to the U.S. review of COCOM exception requests by the Economic Defense Advisory Board. 2/ The views and comments of member-governments are returned to their respective delegates and discussed in COCOM. -This process obviously takes time, 1/ The General Accounting Office in its summary statement of report
to the Congress on "The Government's Role In East-West Trade -Problems And Issues", dated Feb. 4, 1976, however, states that
continued departmental disagreements requiring Presidential
decisions "have occurred frequently in the past," a statement
which appears at variance with the information provided by the OEA. 2/ See p. 45.


normally lasting approximately four weeks before the OEA is informed that license can be issued. Occasionally, however, one or more country delegates raise questions or objections during the COCOM deliberations. These must then be communicated to the OEA, answers prepared and sent back, and the case scheduled for a new CGCOM discussion. In such circumstances, the delay may last several months before the COCOM approval is determined.

Upon the final approval of the application, a validated license for transaction is issued to the applicant by the Issuance Section of the Operations Division. A list of approved validated licenses is published daily by the Office of Export Administration as required by the Export Administration Regulations (sec. 390.4). A sample of the daily list of Export Licenses Approved and Reexports Authorized is attached as Appendix E. The list contains a general description of the commodity or technical data governed by each license, the total value of the commodity, and the country of destination.

In order Lo give a general view of the workload of the OEA

as far as national security licensing is concerned, the following statistical data are presented.

(1) In calendar year 1975, the OEA received a total of 52,107 applications for validated license for exports to all destinations subject to national security controls, and acted on 52,031 of theta. Out of the total of applications acted upon,


45,523 (87.5 percent) were approved, 341 (0.7 percent) were denied, and 6,167 (11.8 percent) were returned without action.

(2) During the same year, OEA acted upon 3,451 applications

for exports to communist countries (6.6 percent of all applications acted upon) by either approving or disapproving them. 1,325 cases (38.4 percent of all communist country cases) were resolved within OEA alone under delegated authorities or guidelines, 995 cases

(28.8 percent) were referred to various advisory agencies for informal consultations, 686 (19.9 percent) were referred to DOD for its formal review, and 445 (12.9 percent) were sent to the Operating Committee. Of the last category, 272 were approved, 125 denied, and 48 were still pending at the year-end. In addition, 83 applications for exports to Yugoslavia, subject to section 4(h) review, were processed under the DOD delegations of authority and guidelines while 416 were sent to DOD for formal review and were all approved.

(3) U.S. exception requests sent to COCOM represent the

largest single--and growing--share of COCOM's exception workload. In the years 1972 through 1975, the United States sent COCOM, respectively, 506, 519, 567, and 789 exception requests; these represented respectively, 36, 38, 41, and 44 percent of all exception requests received by COCOM.

Short supply controls.

All short supply controls are administered by the Short Supply Division of the OEA. The purpose of short supply controls being


the control of all exports of the controlled commodity, no exports may take place under general license G-DEST and every export shipment must be approved by the granting of a validated license.

In the recent years, when short supply export controls were in effect, two basic mechanisms were used for the limitation of exports of controlled commodities. One, already mentioned briefly on page 35, and presently in effect in regard to petroleum and related products, is based on a definite global export quota, established each quarter and within it, for certain commodities, country quotas: these are allocated to each exporter on the basis of his historical participation in the export trade of each commodity, with provision also made for any newcomers to such trade. The other mechanism, which was in use, for example, during the period 1973 when short supply controls were in effect on exports of over1orty agricultural commodities, does not use a definite quantitative limit (quota) and, within it, allocations to exporters, but rather establishes an upper limit for exports by each individual exporter. This limit is determined as a percentage of the quantities under contract by the exporter as of a certain date--the date on which the controls were put into effect or even an earlier date--for foreign delivery but as yet undelivered. Thus, during the controls on agricultural products in 1973, each exporter was at first permitted to export only 40 percent of the soybean oil-cake and meal contracted for but still undelivered as of June 13, 1973 (two weeks


before the controls became effective), 50 percent of such soybean orders, and 100 percent of cottonseed, and cottonseed oil-cake and meal order. Somewhat later, the remaining commodities were approved for export under validated licenses to the extent of 100 percent of unfilled order.

The issuance of validated licenses in such circumstances is

obviously based on strictly quantitative criteria: validated licenses are issued until the quantitative limits set by the licensing regulation are reached; after that point, no more licenses are issued except in cases of hardship, Each hardship case must be documented and is reviewed separately on its own merits by an interagency hardship com-mittee. Agencies represented on hardship committees are usually those that, in addition to the Department of Commerce, have a major interest in short supply export controls in general (e.g., Department of State, Council on International Economic Policy) or specifically in that type of commodity (e-.g., Department of Agriculture for farm products, Federal Energy Administration for petroleum).

Appeals from license denials.

In the rare event that an application for a validated license is denied (less than one percent of applications filed in 1975 were denied), the applicant has the right to appeal 1/ to the Assistant

1/ Regulations governing appeals from denials of licenses or other
administrative action, except sanctions, are contained in part
389 of the Export Administration Regulations.


Secretary for Domestic and International Business, U.S. Department of Commerce, if such denial causes him exceptional and unreasonable hardship, l/ or improperly discriminates against him. The appeal must contain in writing a complete statement of all the pertinent facts and circumstances, and state fully and precisely why the appellant believes it should be granted. Other evidence, supporting the appellant's position, should accompany the appeal.

The Appeals Advisor to the Assistant Secretary forwards the case to the Appeals Coordinator in the OEA where the case and any new information supplied by the appellant are examined by the technical staff. Their findings are reviewed by the Coordinator, and additional advice may be sought from other agencies. The OEA's findings, documents, and comments are returned to the Appeals Advisor where the unclassified portion of the file is made available to the appellant, with the opportunity to respond within 30 days. After that, the Appeals Advisor submits his recommendations to the Assistant Secretary. In his decision the Assistant Secretary may reject the appeal or grant it in whole or in part. His decision is final, and is issued to the appellant in writing. If the appeal is rejected, the appellant is also fully informed of the reasons for the rejection to the extent permitted by national security considerations.

1/ Procedures for hardship relief are specifically included in
the Act (sec. 4A; 50 U.S.C. App. 2403a)


Enforcement and sanctions.

In its section 6 (50 U.S.C. App. 2405), the Export Administration Act provides for administrative sanctions as well as criminal penalties for violations of any provision of the Act or of any regulation, order, or license issued thereunder. Regulations governing enforcement and administrative sanctions and proceedings are contained in parts 387 and 388.

Enforcement of export control provisions and all matters pertaining to sanctions are handled in the OEA by the Compliance Division. The division develops information regarding areas of possible violations, investigates them, and prepares cases for whatever action appears appropriate. In addition to the obvious types of direct violations of export control provisions, such as unauthorized exports or reexports, prohibited in Part 387.6 of the Regulations, other export control connected acts of less direct nature are also prohibited, such as: causing, aiding, and abetting a violation (387.2); solicitation of, or attempt or conspiracy to bring about a violation (387.3); acting with knowledge of a violation (387.4); misrepresentation and concealment of facts (387.5); unauthorized use or alteration of export control documents (387.8); trafficking in or advertising exportcontrol documents (387.9); and transactions with persons known to be subject to denial orders (387.10). The Division also enforces compliance with the antiboycott provisions of the Act.


Enforcement proceedings. Actual or possible violations of the export control provisions, most frequently unauthorized exports or reexports, I/ come to the attention of the Compliance Division in several ways: a violation may be disclosed by the contravening firm itself, or reported by another firm, possibly a competitor; officials of the U.S. Customs Service or U.S. Postal Service as well as the division's own staff may uncover it by inspecting outbound cargo for licensing requirements; occasionally, it is uncovered by Foreign Service personnel located in foreign countries; U.S. investigative agencies, such as the F.B.I. or the C.I.A., become aware of violations or may even be asked to investigate situations in which a violation might be likely to occur to determine whether one might in fact have occurred.

After the Compliance Division becomes aware of a possible

violation, it may send an interrogatory to the suspected firm to obtain additional information. If the firm replies, the information is used to determine whether administrative proceedings should be initiated by serving on the firm a charging letter. If the firm fails to respond to the interrogatory, it is considered in default

I/ Information received from the Compliance Division indicates that
violations related to exports tend to be more of a technical
tiature (e.g., unwitting unlicensed export of a commodity subject to validated licensing, or export tinder an expired license) while violations related to reexports tend to be more of a substantive
nature (e.g., diversion of COCOM-controlled commodities to unauthorized destinations).


and the charging letter is served based on the available information. In the charging letter are alleged the essential known facts constituting the specific violation, and notice is given that, in the event the respondent is found to have committed the alleged violation, specific administrative sanctions or civil penalties may be imposed. If he fails to reply, he is deemed in default and the allegations are considered to have been admitted; the case then is referred to a Hearing Commissioner, designated by the Director of the Bureau of East-West Trade, for his consideration. If the respondent does answer the charging letter, the response must contain, in addition to a specific admission or denial of each allegation, detailed information and evidence in support of his defense or in mitigation of the charges. At the same time, he may also request an oral hearing before the Hearing Commissioner. Recourse to oral hearings is not available to suspected violators who fail to answer the charges.

Hearings are to be conducted by the Hearing Commissioner in a

fair and impartial manner and, while the rules of evidence prevailing in the courts do not apply, all evidence relevant and material to the inquiry must be considered and the respondent may be represented by legal counsel. On the basis of all information gathered through the hearing, the Hearing Commissioner prepares a written report containing all findings of fact, including whether or not a violation had taken place, and his recommendations. The report and all the records of the hearing are then transmitted to the Director of the OEA


for action.

If the Hearing Commissioner finds that the evidence does not support a conclusion that a violation had been committed, the Director of the OEA enters an order dismissing the charges. If, on the other hand, the Hearing Commissioner concludes that a violation has occurred, his recommendation is only advisory and the disposition is determined by the Director who may issue an order imposing such administrative sanctions as he deems appropriate.

The hearing may be avoided if, after the transmission of a

charging letter, the respondent and the OEA agree to submit to the Hearing Commissioner a proposal for the issuance of a consent order. If the Commissioner, upon reviewing the facts and, if need be, conducting informal conferences with the parties and informally receiving additional evidence, disapproves the proposal, the case proceeds to 'hearing. If he approves the proposal, he submits the facts and his recommendations to the OEA Director who, in turn, may reject the proposal, in which event the case goes to hearing, or he may accept it and issue an appropriate order.

In serious cases of violation of export control provisions, which in the evaluation of the Compliance Division warrant the institution of a criminal proceeding, all the pertinent facts, evidence, and recommendations are prepared by the Division and forwarded to the General Counsel of the U.S. Department of Commerce for review and transmission to the U.S. Department of Justice for


possible criminal prosecution. The existence of an administrative proceeding, or the imposition of an administrative sanction or civil penalty resulting from one, does not preclude the institution of criminal prosecution based on the same violation.

Sanctions. The principal sanctions applied to violators of export control provisions are those imposed by the Director of the OEA as a result of the administrative proceedings before the Hearing Commissioner. As the charging letter is required by regulation to indicate, these sanctions include: (1) general denial of export privileges, (2) total exclusion from practice before the Bureau of East-West Trade, U.S. Department of Commerce, and (3) monetary civil penalty. Each of these penalties may be imposed either alone or in addition to any of the other two. In less serious cases (e.g., in minor technical violations), a letter of warning may

be sent to the violator.

The most frequently used sanction that is more severe than a

letter of warning is the.denial of export privileges. Such a denial prohibits the violator from participating directly or indirectly, in any capacity, in any transaction involving commodities or technical data exported or to be exported from the United States, or which are otherwise subject to Export Administration Regulations (e.g., reexports from foreign countries). The ban on such participation specifically,


but not exclusively, refers to applying for, preparing, filing, obtaining, or using any export license, and to any commercial, financial, or similar activity connected with any commodity or technical data (388.1(a)(2)). A denial order may be issued for a specific time period or, more often, for "duration", which means that it remains in effect for the duration of export controls, that is, as long as the present statute or any successor legislation that provides for carryover remains in effect. Denial orders may also be issued with a probationary period provision. During such period, usually following a period of actual denial, the denial of privileges is held in abeyance but may be reinstated upon an application by the Gompliance Division for an order revoking the probation, a report and recommendation thereon by the Hearing Commissioner, and final determination by the OEA Director. The probation period may last for "duration" or until a specified date.

Denial of export privileges of more limited scope or duration may be imposed in a number of circumstances other than pursuant to a formal finding by the Hearing Commissioner. A charging letter, for example, may deny to the respondent the privilege of participating in any manner in any U.S. export transaction pursuant to a validated license; it may also, somewhat less restrictively, suspend or revoke any validated licenses outstanding to the benefit of the respondent, without denying him any other export privileges (388.11(a)).

An order for an "indefinite" denial of export privileges may be


issued by the OEA Director against a person who refuses or fails to furnish to the OEA, in the course of an investigation or other proceeding, responsive answers to interrogatories or to other requests for information, documents, or other tangible things that have a bearing upon the investigation. An "indefinite" denial remains in effect until the person subject to it responds to the request or gives adequate reason for his failure or refusal to respond (388.15).

Denial orders may also be "temporary". Such denial orders may be issued against a person who is under investigation, or against whom administrative or judicial proceedings are pending, for violation of export control provisions, if such denial is found reasonably necessary to protect the public interest pending final disposition of the investigation or proceedings. They are issued only for such limited time, ordinarily not over 30 days, as is necessary to complete the case, but may be extended if necessary. Indefinite and temporary denial orders may be issued only if the Hearing Commissioner, upon application by the-Compliance Division and his review of the case, approves such action (388.11(b), .15).

An order issued upon default may be vacated by having the default .Set aside upon the respondent's application and the Hearing Commissioner's consideration of the case and recommendation (388.4(b)). Similarly, temporary denials of export privileges contained in a charging letter or an order as well as indefinite denial orders may be vacated or modified upon the filing of an appropriate motion with


the Comissioner and after his consideration and recommendation (388.11(c), .15); similar procedure applies also to objections to, or requests to set aside, revocations of probation (388.16(b)). Any case may be reopened by the Commissioner upon a written request by the respondent and submission of relevant and material evidence which was not known or obtainable at the time of the original proceeding. The reopened proceeding is conducted in the same manner as the original one (388.12).

Civil penalties may also be imposed by the Director of the OEA, as authorized by sec. 6(c) of the Act (50 U.S.C. App. 2405(c)). These consist of monetary fines not in excess of $1,000 for each violation.

After the disposition of a case following a formal hearing, the respondent may appeal from a denial of export privileges or privileges of practice, or from civil penalty on any of three grounds: (1) that the findings of violation are not supported by substantial evidence, (2) that prejudicial error of law was-committed, or (3) that the provisions of the order are arbitrary, capricious, or an abuse of discretion. Appeals may also be filed from a denial upon default, or temporary or indefinite denial, but only if relief had been first requested through the appropriate procedure, and denied. Appeals are handled by the Appeals Board of the U.S. Department of Commerce primarily on the basis of the record containing all the relevant documents, but may also include an informal oral


presentation. In the Appeals Board's decision which is final, the appeal may be granted or denied, in whole or in part (388.13).

In criminal cases, referred to the U.S. Department of Justice for prosecution, penalties for violations are prescribed by the statute. A knowing violator of any provision of the Act or any regulation, license, or order issued thereunder is punishable, for the first offense, with a fine of up to $10,000, or with imprisonment of up to one year, or both. For the second or any subsequent offense, the fine may be as high as $20,000 or three times the value of the exports involved, whichever is greater, and the imprisonment may be for as long as five years. For willful exportation of anything contrary to the export control provisions, with knowledge that the export will be used for the benefit of a communist nation, the penalty is $20,000 or five times the value of the export involved, whichever is greater, or up to five years imprisonment, or both (sec. 6(a) and (b) of the Act; 50 U.S.C. App. 2405(a),(b)). Imposition of penalties in a criminal proceeding affects in no way any administrative or civil sanctions that have been imposed on the defendant for the same violation.

Enforcement workload. The enforcement workload of the

Compliance Division is fairly heavy. In 1975, the division had in process, overall, 210 preliminary investigations of which 126 were pending at the beginning of the year, and 84 were instituted during


the year; 50 cases were closed during the year with 160 remaining still pending at the year-end. The division also handled 251 fullscale investigations, of which 78 were carryovers from the previous year and 173 begun anew; 154 cases were closed and 97 still pending at end of the year. As a result of these cases, 385 warning letters. were sent, 24 definite denial orders were issued, and civil penalties amounting to $29,500 were levied in 6 cases. l/ In one instance, the case was referred to the U.S. Department of Justice for possible prosecution.

Orders either imposing, or modifying or revoking, denial or probation are published in the Federal Register, and the Export Control Regulations (Supplement 1 to Part 388). A sample page appears as Appendix F. A very recent tabulation of denial or probation orders issued since inception of the program and currently still in effect shows a total of 645 such orders, affecting firms in 35 foreign countries and 9 States. Of these, 288 are effective for duration, 175 indefinite, 123 probationary, 30 expiring on a specific date, and 29 until further notice.

l/ Civil penalties amounting to $4,000 were also levied in 4 cases
of noncompliance with the anLiboycott provisions.


Appendix A. Export Administration Act, as amended

AN ACT (5) Unreasonable restrictions on access
To provide for continuation of authority for to world supplies can cause worldwide poregulation of exports litical and economic instability, interfere
with free international trade, and retard the
Be it enacted by the Semte and House of growth and development of nations. Representatives of the United States of
America in Congress assembled, DECLARATION OF POLICY
SHORT TITLE SEC. 3. The Congress makes the following
SECTION 1. This Act may be cited as' the declarations:
"Export Administration Act of 1969." (1) It is the policy of the United States
both (A) to encourage trade with all counFINDINGS tries with which we have diplomatic or tradSEC. 2. The Congress makes the following ing relations, except those countries with findings: which such trade has been determined by the
(1) The availability of certain materials President to be against the national interest, at home and abroad varies so that the quan- and (B) to restrict the export of goods and tity and composition of U.S. exports and technology which would make a significant their distribution among importing countries contribution to t4e military potential of any may affect the welfare of the domestic econ- other nation or nations which would prove omy and may have an important bearing detrimental to the national security of the
upon fulfillment of the foreign policy of the United States. United States. (2) It is the policy of the United States to
(2) The unrestricted export of materials, use export controls (A) to the extent necesinformation, and technology without regard sary to protect the domestic economy from to whether they make a significant contribu- the excessive drain of scarce materials and tion to the military potential of any other na- to reduce the serious inflationary impact of tion or nations may adversely affect the foreign demand, (B) to the extent necessary national security of the United States. to further significantly the foreign policy of
(3) The unwarranted restriction of ex- the United States and to fulfill its internaports from the United States has a serious tional responsibilities, and (C) to the extent adverse effect on our balance of payments, necessary to exercise the necessary vigilance particularly when export restrictions applied over exports from the standpoint of their by the United States are more extensive than significance to the national security of the export restrictions imposed by countries United States. with which the United States has defense (3) It is the policy of the United States
treaty commitments. (A) to formulate, reformulate, and apply any
(4) The uncertainty of policy toward cer- necessary controls to the maximum extent tain categories of exports has curtailed the possible in cooperation with all nations, and efforts of American business in those cate- (B) to formulate a unified trade control gories to the detriment of the overall attempt policy to be observed by all such nations. to improve the trade balance of the United (4) It is the policy of the United States to
States. use its economic resources and trade potential


to further the sound growth and stability of AUTHORITY
its economy as well as to further its national
security and foreign policy objectives. SEc. 4. (a) (1) The Secretary of Commerce
(5) It is the policy of the United States shall institute such organizational and proce(A) to oppose restrictive trade practices or dural changes in any office or division of the boveotts fostered or imposed by foreign coun- Department of Commerce which has heretotries against other countries friendly to the fore exercised functions relating to the conUnited States, (B) to encourage and request trol of exports and continues to exercise such domestic concerns engaged in the export of controls under this Act as he determines are articles, materials, supplies, or information, necessary to facilitate and effectuate the fullto refuse to take any action, including the est implementation of the policy set forth in furnishing of information or the signing this Act with a view to promoting trade with of agreements, which 'has the effect of fur- all nations with which the United States is thering or supporting the restrictive trade engaged in trade, including trade with (A) practices or boycotts fostered or imposed by those countries or groups of countries with any foreign country against another country which other countries or groups of countries friendly to the United States, and (C) to having defense treaty commitments with the foster international cooperation and the de- United States have a significantly larger pervelopment of international rules and institu- centage of volume of trade than does the tions to assure reasonable access to world United States, and (B) other countries eligisupplies. ble for trade with the United States but not
(6) It is the policy of the United States significantly engaged in trade with the United that the desirability of subjecting, or con- States. In addition, the Secretary shall review tinuing to subject, particular articles, ma- any list of articles, materials, or supplies, terials, or supplies, including technical data including technical data or other informaor other information, to United States export tion, the exportation of which from the controls should be subjected to review by and United States, its territories and possessions, was heretofore prohibited or curtailed with a
consultation with representatives of appro- view to making promptly such changes and priate United States Government agencies revisions in such list as may be necessary or
and qualified experts from private industry. desirable in furtherance of the policy, pur(7) It is the policy of the United States poses, and provisions of this Act. The Secreto use export controls, including license feeg, tary shall include a detailed statement with, to secure the removal by foreign countries of respect to actions taken in compliance with restrictions on access to supplies where such the provisions of this paragraph in the secrestrictions have or may have a serious ond quarterly report (and in any subsequent
domestic inflation ary impact, have caused or report with respect to actions taken during may cause a serious domestic shortage, or the preceding quarter) made by him to the have been imposed for purposes of influenc- Congress after the date of enactment of this ing the foreign policy of the United States. Act pursuant to section 10. In effecting this policy, the President shall (2) The Secretary of Commerce shall use make every reasonable effort to secure the all practicable means available to him to keep removal or reduction of such restrictions, the business sector of the Nation fully appolicies, or actions through international co- prised of changes in export control policy operation and agreement before resorting to and procedures instituted in conformity with the imposition of controls on the export of this Act with a view to encouraging the widmaterials from the United States: Provided, est possible trade. That no action taken in fulfillment of the
policy set forth in this paragraph shall apply (b) (1) To effectuate the policies set forth to the export of medicine or medical supplies. in section 3 of this Act, the President may


prohibit or curtail the exportation from the (2) The Secretary of Commerce, in coUnited States, its territories and possessions, operation with appropriate United States of any articles, materials, or supplies, includ- Government departments and agencies and ing technical data or any other information, the appropriate technical advisory commitexcept under such rules and regulations as tees established under section 5 (c), shall unhe shall prescribe. To the extent necessary dertake an investigation to determine which to achieve effective enforcement of this Act, articles, materials, and supplies, including these rules and regulations may apply to the technical data and other information, should financing, transporting, and other servicing no longer be subject to export controls beof exports and the participation therein by cause of their significance to the national any person. Rules and regulations may pro- security of the United States. Notwithstandvide for denial of any request or application ing the provisions of paragraph (1), the for authority to export articles, materials, President shall remove unilateral export conor supplies, including technical data, or any trols on the export from the United States of other information, from the United States, articles, materials, or supplies, including its territories and possessions, to any nation technical data or other information, which he or combination of nations threatening determines are available without restriction from sources outside the United States in
the national security of the United States if significant quantities and comparable in the President determines that their export quality to those produced in the United would prove detrimental to the national se- States, except that any such control may recurity of the United States, regardless of main in effect if the President determines their availability from nations other than any that.adequate evidence has been presented to nation or combination of nations threaten- him demonstrating that the absence of such ing the national security of the United States, a control would prove detrimental to the na but whenever export licenses are required tonal security of the United States. The naon the ground that considerations of national ture of such evidence shall be included in the security override considerations of foreign special report required by paragraph (4). availability, the reasons for so doing shall
be reported to the Congress in the quarterly (3) In conducting the investigation rereport following the decision to require such ferred to in paragraph (2) and in taking the licenses on that ground to the extent con- action required under such paragraph, the siderations of national security and foreign Secretary of Commerce shall give priority policy permit. The rules and regulations to those controls which apply to articles,
shall implement the provisions of section materials, and supplies, including technical 3 (5) of this Act and shall require that all data and other information, for which there domestic concerns receiving requests for the are significant potential export markets. furnishing of information or the signing (4) Not later than nine months after the
of agreements as specified in that section date of enactment of the Equal Export Opmust report this fact to the Secretary of portunity Act, the Secretary of Commerce Commerce for such action as he may deem shall submit to the President and to the
appropriate to carry out the purposes of that Congress a special report of actions taken section. In curtailing the exportation of any under paragraphs (2) and (3). Such report articles, materials, or supplies to effectuate shall containthe policy set forth in section 3 (2) (A) of (A) a list of any articles, materials, and this Act, the President is authorized and supplies, including technical data and other directed to allocate a portion of export li- information, which are subject under this censes on the basis of factors other than a Act to export controls greater than those prior history of exportation. imposed by nations with which the United


States has defense treaty commitments, and tion shall not be exercise witri respecL w the reasons for such greater controls; and any agricultural commodity, including fats
(B) a list of any procedures applicable to and oils or animal hides or skins, without the (.,\port licensing in the United States which approval of the Secretary of Agriculture. may be or are claimed to be more burden- The Secretary of Agriculture shall not ap
Some than similar procedures utilized in na- prove the exercise of such authority with tions with which the United States has de- respect to any such commodity during any ft:nse treaty commitments, and the reasons period for which the supply of such comfur retaining such procedures in their pres- modity is determined by him to be in excess c-nt form. of the requirements of the domestic economy,,
(c) (1) To effectuate the policy set forth except to the extent the President determines in section 3 (2) (A) of this Act, the Secretary that such exercise of authority is required to uf Commerce shall monitor exports, and con- effectuate the policies set forth in clause (B) tracts for exports, of any article, material, or (C) of paragraph (2) of section 3 of this or supply (other than a commodity which is Act. subject to the reporting requirements of sec- (g) Any export license application required tion 812 of the Agricultural Act of 1970) by the exercise of authority under this Act when the volume of such exports in relation to effectuate the policies of section 3(1) (B) to domestic supply contributes, or may con- or 3 (2) (C) shall be approved or disapproved tribute, to an increase in domestic prices or not later than 90 days after its submission. a domestic shortage, and such price increase If additional time is required, the Secretary or shortage has, or may have, a serious ad- of Commerce or other official exercising auverse impact on the economy or any sector thority under this Act shall inform the apthereof. Information which the Secretary plicant of the circumstances requiring such
requires to be furnished in effecting such additional time and give an estimate of when monitoring shall be confidential, except as his decision will be made. provided in paragraph (2) of this subsection. (h) (1) The Congress finds that the de(2) The results of such monitoring shall, fense posture of the 'United States may be to the extent practicable, be aggregated and seriously compromised if the Nation's goods included in weekly reports setting forth, with and technology are exported to a controlled respect to each article, material, or supply country without an adequate and knowledge. monitored, actual and anticipated exports, able assessment being made to determine the destination by country, and the domestic whether export of such goods and technology and worldwide price, supply, and demand will significantly increase the military caSuch reports may be made monthly if the ability of such country. It is the purpose of
Secretary determines that there is insuffi- this subsection to provide for such an assesscient information to justify weekly reports. ment and to authorize the Secretary of De(d) Nothing in this Act or the rules or fense to review any proposed export of goods regulations thereunder shall be construed to or technology to any such country and, whenrequire authority or permission to export, ever he determines that the export of such except where required by the President to goods or technology will significantly ineffect the policies set forth in section 3 of crease the military capability of such counthis Act. try, to recommend to the President that such
(e) The President may delegate the power, export be disapproved.
authority, and discretion conferred upon him (2) Notwithstanding any other provision by this Act to such departments, agencies, of law, the Secretary of Defense shall deteror officials of the Government as he may deem mine, in consultation with the export control appropriate. office to which licensing requests are made,
(f) The authority conferred by this sec- the types and categories of transactions


which should be reviewed by him to carry out (i) machinery, equipment, capital
the purpose of this subsection. Whenever a goods, or computer software; or
license or other authority is requested for (ii) any license or other arrangement
the export of such goods or technology to for the use of any patent, trade secret,
any controlled country, the appropriate ex- design, or plan with respect to any item
port control office or agency to whom such described in clause (i) ;
request is made shall notify the Secretary of (B) the term 'export control office' Defense of such request, and such office may means any office or agency of the United not issue any license or other authority pur- States Government whose approval or persuant to such request prior to the expiration mission is required pursuant to existing of the period within which the President law for the export of goods or technology;
may disapprove such export. The Secretary and
of Defense shall carefully consider all notifi- (C) the term 'controlled country' means cations submitted to him pursuant to this any Communist country as defined under
subsection and, not later than 30 days after section 620(f) of the Foreign Assistance notification of the request shall- Act of 1961.
(A) recommend to the President that (i) In imposing export controls to effectuhe disapprove any request for the export ate the policy stated in section 3 (2) (A) of of any goods or technology to any con- this Act, the President's authority shall introlled country if be determines that the clude but not be limited to, the imposition of
export of such goods or technology will export license fees.
significantly increase the military capability of such country; PROCEDURES FOR HARDSHIP RELIEF FROM
(B) notify such office or agency that he EXPORT CONTROLS
will interpose no objection if appropriate SEC. 4A. (a) Any person who, in his doconditions designed to achieve the purposes mestic manufacturing process or other doof this Act are imposed; or mestic business operation, utilizes a product
(C) indicate that he does not intend to produced abroad in whole or in part from a
interpose an objection to the export of such commodity historically obtained from the goods or technology. United States but which has been made subIf the President notifies such office or agency, ject to export controls, or any person who within 30 days after receiving a recommenda- historically has exported such a commodity, tion from the Secretary, that he disapproves may transmit a petition of hardship to the Secretary of Commerce requesting an exempsuch export, no license brother authoriza- tiQn from such controls in order to alleviate tion may be issued for the export of such any unique hardship resulting from the imgoods or technology to such country. position of such controls. A petition under
(3) Whenever the President exercises his this section shall be in such form as the authority under this subsection to modify or Secretary of Commerce shall prescribe and overrule a recommendation made by the Sec- shall contain information demonstrating the retary of Defense pursuant to this section, need for the relief requested. the President shall submit to the Congress a (b) Not later than 30 days after receipt statement indicating his decision together of any petition under subsection (a), the with the recommendation of the Secretary of Secretary of Commerce shall transmit a Defense. written decision to the petitioner granting or
(4) As used in this sulisection- denying the requested relief. Such decision
shall contain a statement setting forth the
(A) the term 'gooda or technology' Secretary's basis for the grant or denial.
means- Any exemption granted may be subject to


such conditions as the Secretary deems ap- ship is due to imprudent acts or failure to act propriate. on the part of the appellant."'
(c) For purposes of this section, the Secretary's decision with respect to the grant CONSULTATION AND STANDARDS or denial of relief from unique hardship re- SEC. 5. (a) In determining what shall be sulting directly or indirectly from the im- controlled or monitored under this Act, and position of controls shall reflect the Secre- in determining the extent to which exports tary's consideration of such factors as- shall be limited, any department, agency, or
(1) Whether denial would cause a official making these determinations shall
unique hards',iip to the applicant which can seek information and advice from the sevbe alleviated only by granting an exception eral executive departments and independent to the applicable regulations. In determin- agencies concerned with aspects of our doing whether relief shall be granted, the mystic and foreign policies and operations Secretary will take into account: having an important bearing on exports.
(A) ownership of material for which Such departments and agencies shall fully
there is no practicable domestic market cooperate in rendering such advice and inby virtue of the location or nature of formation. Consistent with considerations the material; of national security, the President shall from
(B) potential serious financial loss to time to time seek information and advice
the applicant if not granted an excep- from various segments of private industry tion; in connection with the making of these de(C) inability to obtain, except through terminations. In addition, the Secretary of
import, an item essential for domestic Commerce shall consult with the Federal use %,,,-hich is produced abroad from the Energy Administration to determine whether commodity under control; monitoring under section 4 of this Act is
(D) the extent to which denial would warranted with respect to exports of faciliconflict, to the particular detriment of ties, machinery, or equipment normally and the applicant, with other national poli- principally used, or intended to be used, in, cies including those reflected in any in- the production, conversion, or transportation, ternational agreement to which the of fuels and energy (except nuclear energy),
United States is a party; including but not limited to, drilling rigs,
(E) possible adverse eff ects on the platforms, and equipment; petroleum refineconomy (including unemployment) in eries, natural gas processing, liquefication,
any locality or region of the United and gasification plants; facilities for producStates; and tion of synthetic natural gas or synthetic
(F) other relevant factors, including crude oil; oil and gas pipelines, pumping
the applicant's lack of an exporting his- stations, and associated equipment; and tory during any base period that may be vessels for transporting oil, gas, coal, and
established with respect to export quotas other fuels.
for the particular commodity. (b) (1) In authorizing exports, full utiliza(2) The effect a finding in favor of tion of private competitive trade channels
the applicant would have on attainment of shall be encouraged insofar as practicable, the basic objectives of the short supply giving consideration to the interests of small control program. business, merchant exporters as well as proIn all cases, the desire to sell at higher prices ducers, and established and new exporters, and thereby obtain greater profit will not and provision shall be made for representabe considered as evidence of a unique hard- tive trade consultation to that end. In addiship, nor will circumstances where the hard- tion, there may be applied such other stand-


ards or criteria as may be deemed necessary forth in section 3 of this Act. Such commitby the head of such department, or agency, or tees shall be consulted with respect to quesofficial to carry out the policies of this Act tions involving technical matters, worldwide
(2) Upon imposing quantitative restric- availability and actual utilization of productions on exports of any article, material, or tion and technology, and licensing procedures supply to carry out the policy stated in sec- which may affect the level of export controls tion 3 (2) (A) of this Act, the Secretary of applicable'to any articles, materials, or supCommerce shall include in his notice pub- plies, including technical data or other inforlished in the Federal Register an invitation mation, and including those whose export is to all interested parties to submit written subject to multilateral controls undertaken comments within fifteen days from the date with nations with which the United States of publication of the impact of such restric- has defense treaty commitments, for which tions and the method of licensing used to the committees have expertise. Such comimplement them. mittees shall also be consulted and kept fully
(c) (1) Upon written, request by repre- informed of progress with respect to the insentatives of a substantial segment of any vestigation required by section 4 (b) (2) of industry which produces articles, materials this Act. Nothing in this subsection shall and supplies, including technical data and prevent the Secretary from consulting, at other information, which are subject to ex- any time, with any person representing inport controls or are being considered for such dustry or the general public regardless of controls because of their significance to the whether such person is a member of a techninational security of the United States, the cal advisory committee. Members of the pubSecretary of Commerce shall appoint a tech- lic shall be given a reasonable opportunity, nical advisory committee for any grouping pursuant to regulations prescribed by the of such articles, materials, and supplies, in- Secretary of Commerce, to present evidence cluding technical data and other information to such committees. which he determines is difficult to evaluate (3) Upon request of any member of any because of questions concerning technical such committee, the Secretary may, if he matters, worldwide availability and actual determines it appropriate, reimburse such utilization of production and technology, or member for travel, subsistence, and other licensing procedures. Each such committee necessary expenses incurred by him in conshall consist of representatives of United nection with his duties as a member. States industry and government, including
the Departments of Commerce, Defense, and (4) Each such committee shall elect a
State, and, when appropriate, other Govern- chairman, and shall meet at least every three ment departments and agencies. No person months at the call of the Chairman, unless
serving on any such, committee who is repre- the Chairman determines, in consultation sentative of industry shall serve on such with the other members of the committee, committee for more than two consecutive that such a meeting is not necessary to
years. achieve the purposes of this Act. Each such
(2) It shall be the duty and function of committee shall be terminated after a period the technical advisory committees established of two years, unless extended by the Secreunder paragra ph (1) to advise and assist the tary for additional periods of two years. The Secretary of Commerce and any other de- Secretary shall consult each such committee
partment, agency, or official of the Govern- with regard to such termination or extension ment of the United States to which the Presi- of that committee. dent has delegated power, authority, and dis- (5) To facilitate the work of the technical cretion under section 4 (d) with respect to advisory committees, the Secretary of Comactions designed to carry out the policy set merce, in conjunction with other depart-


ments and agencies participating in the ad- granted or to Oe granteii Lo tne person upon ministration of this Act, shall disclose to whom such penalty is imposed. each such committee adequate information, (e) Any amount paid in satisfaction of
consistent with national security, pertaining any penalty imposed pursuant to subsection to the reasons for the export controls which (c) shall be covered into the Treasury as a are in effect or contemplated for the group- miscellaneous receipt. The head of the deing of articles, materials, and supplies with partment or agency concerned may, in his respect to -which that committee furnishes discretion, refund any such penalty, within advice. two years after payment, on the ground of a
material error of fact or law in the imposiV101AIONStion. Notwithstanding section 1346(a) of VIOLAIONStitle 28 of the U.S. Code, no action for the SF-c. 6. (a) Except as provided in subsec- refund of any such penalty may be maintion (b) of this section, whoever knowingly tamned in any court. violates any provision of this Act or any (f) In the event of the failure of any regulation, order, or license issued there- person to pay a penalty imposed pursuant under shall be fined not more than $10,000 to subsection (c), a civil action for the reor imprisoned not more than one year, or covery thereof may, in the discretion of the both. For a second or subsequent offense, head of the department or agency concerned, the offender shall be fined not more than three be brought in the name of the United States. times the value of the exports involved or In any such action, the court shall determine $20,000, whichever is greater, or imprisoned de novo all issues necessary to the establishnot more than five years, or both. ment of liability. Except as provided in this
(b) Whoever willfully exports anything subsection and in subeto (d), no such contrary to any provision of this Act or any liability shall be asserted, claimed, or rereg.ulation, order, or license issued there- covered upon by the United States in any under, with knowledge that such exports will way unless it has previously been reduced to be used for the benefit of any Communist- judg-ment. dominated nation, shall be fined not more (g) Nothing in subsection (c), (d), or (f)
than five times the value of the exports in- limits evolved or $20,000, whichever is greater, or ()teaalblt fohramns
imprisoned not more than five years, or both. (1 h v Ibit of thramns trative or judicial remedies with respect to
(c) The head of any department or agency violations of this Act, or any regulation, orex>ercising any functions under this Act, or der, or license issued under this Act; any officer or employee of such department or (2) the authority to compromise and age ncy specifically desig-nated by the head seteamntriv pocdng bouh
th ,ereof, may impose a civil penalty not to witthleec mi vioations pofethins Actouany exceed $1,000 for each violation of this Act reution border o licenseofissuedAunderrthis or any regulation, order, or license issued react on reoicneisedudrti !inder this Act, either in addition to or in Ac;o lieu of any other liability or penalty which (3) the authority to compromise, remit maly be imposed. or mitigate seizures and forfeitures pursuant
(d) h pamen ofanypenltyimpsed to section I (b) of title VI of the Act of puirsuiant to subsection (c) may be made a Jtn 5 97(2USC 0 b
condition, for a period not exceeding one yearENOCM T
after the imposition of such penalty, to theEN RCM T
grant ing, restoration, or continuing validity S Ec. 7. (a) To the extent ncsayor apOf any export license, permission, or privilege propriate to the enforcement of this Act or


to the imposition of any penalty, forfeiture, that the withholding thereof is contrary to or liability arising under the Export Control the national interest., Act of 1949, the head of any department (d) In the administration of this Act, reor agency exercising any function thereunder porting requirements shall be so designed as (and officers or employees of such depart- to reduce the cost of reporting, recordkeepment or agency specifically designated by ing, and export documentation required unthe bead thereof) may make such investiga- der this Act to the extent feasible consistent tions and obtain such information from, re- with effective enforcement and compilation quire such reports or the keeping of such of useful trade statistics. Reporting, recordrecords by, make such inspection of the books, keeping, and export documentation requirements shall be periodically reviewed and rerecords, and other writings, premises, or vised in the lijzht of developments in the field property of, and take the sworn testimony of information technology. A detailed stateof, any person. In addition, such officers or ment with respect to any action taken in comemployees may administer oaths or affirma- pliance with this subsection shall be included tions, and may by subpoena require any person in the first quarterly report made pursuant to to appear and testify or to appear and-pro- section 10 after such action is taken. duce books, records, and other writings, or
both, and in the case of contumacy by, or EXEMPTION FROM CERTAIN
refusal to obey a subpoena issued to, any such PROVISIONS RELATING TO
person, the district court of the United States ADMINISTRATIVE PROCEDURE AND for any district in which such person is found JUDICIAL REVIEW
or resides or transacts business upon ap- SEc. 8. The functions exercised under this plication, and after notice to any such person Act are excluded from the operation of secand hearing, shall have jurisdiction to issue tions 551, 553-559, and 701-706, of title 5 an order requiring such person to appear and U.S. Code. give testimony or to appear and produce
books, records, and otbek writings, or both, INFORMATION TO EXPORTERS
and any failure to obey such order of the SFC. 9. In order to enable U.S. exporters to
court may be punished by such court as a coordinate their business activities with the contempt thereof. export control policies of the U.S. Govern(b) No person shall be excused from com- ment, the agencies, departments, and officials responsible for implementing the rules
plying with any requirements under this sec- and regulations authorized under this Act, tion because of hi's privilege against self- shall, if requested, and insofar as it is conincrimination, but the immunity provisions sistent with the national security, the forof the Compulsory Testimony Act of Feb- eign policy of the United States, the effecruary 11, 1893 (27 Stat. 443; 49 U.S.C. 46) tive administration of this Act, and requireshall apply with respect to any individual ments of confidentiality contained in this who specifically claims such privilege. ActW No department agency, or official ex- (1) inform each exporter of the consideraercising any functions under this Act shall tions which may cause his export license request to be denied or to be the subject of
publish or disclose information obtained lengthy examination; hereunder which is deemed confidential or (2) in the event of undue delay, inform
with reference to which a request for con- each exporter of the circumstances arising fidential treatment is made by the person
furnishing such information, unless the head
of such department or agency determines


during the Government's consideration of his DEFINITION
export license application which are cause SE 11. Th term "person" as used in this
for denial or for further examination; Act includes the sing-ular and the plural and
(3) give each exporter the opportunity to any individual, partnership, corporation, or present evidence and information which he other form of association, including any govbelieves will help the agencies, departments, erment or agency thereof. and officials concerned to resolve any problems or questions which are, or may be, con-EF CT ON THRA S
niected with his request for a license; andEF CT ON THRAT
(4) inform each exporter of the reasons SEC. 12. (a) The Act of February 15,
for a denial of an export license request. 1936 (49 Stat, 1140), relating to the licensing of exports of tinplate scrap, is hereby superQUARTERLY REPORT seded; but nothing contained in this Act shall
SEC 10(a)The head of any department or be construed to modify, repeal, supersede, or
SEC 10a)otherwi se affect the provisions. of a~ny other a 'gency, or other official exercising any func- lw uhrzn oto vreprso n
tions under this Act, shall make a semian- cawsauodizigcntoyvr.xotson nual report Ito the President and to the Con- commodTy.atoiygate otePei
gress of his operations hereunder. dent under this Act shall be exercised in such
(b) (1) The quarterly report required for manner as to achieve effective coordination the first quarter of 1975 and every second with the authority exercised under section report thereafter shall include summaries of 414 of the Mutual Security Act of 1954 (22 the information contained in the reports re- U.S.C. 1934). quired by section 4(c) (2) of this Act, together with an analysis by the Secretary of EFCIEDT
Commerce of (A) the impact on the economy EFCIEDT
and world trade of shortages or increased SEC. 13. (a) This Act takes effect upon the,
prices for articles, materials, or supplies expiration of the Export Control Act of 1949. subject to monitoring under this Act, (B) (b) All outstanding delegations, rules,
the worldwide supply of such ar-ticles, mate- regulations, orders, licenses, or other forms rials, and supplies, and (C) actions taken by of administrative action under the Export other nations in response to such shortages Control Act of 1949 or section 6 of the Act or increased prices. of July 2, 1940 (54 Stat. 714), shall, until
(2) Each such quarterly report shall also amended or revoked, remain in full force and contain an analysis by the Secretary of Coin- effect, the same as if promulgated under this merce of (A) the impact on the economy and A ct. world trade of shortages or increased prices for commodities subject to the reporting re- TRIAINDT
quirements of section 812 of the Agricultural TRIAINDT
Act of 1970, (B) the worldwide Supply Of SEC. 14. The authority granted by this Act
sujch commiodities, and (C) actions being terminates on September 30, 1976, or upon taken by other nations in response to such any prior date which the Congress by conshorae ricesdprcs h ertr current resolution or the President by procof Agriculture shall fully cooperate with the lamnation may designate. Secretary of C7ommerce in providing all information required by the Secretary of Commerce in making such inalySiS.


Appendix B. Commodity Control List (sample page)

Is CLV S Value Limits
CV .1dated for Shipments to .
Department of Commerce I linse for op t
~omno-ty.desiptyo Numoer Counor Grup aV
Sport Control Commodi y Number Unit fRequired for C t u
Co-'-dily Description r.Z shown Below A.

71980(20)A Vacuum metallizing machinery spe- If ...... 11411 !1 QSTVWYZ 11 500 I1 500 II 0 i
cially designed for the continuous strip roll coating
with metallized sheathing of synthetic film for dielectric use in the manufacture of capacitors listed under No.
7299 if such number is followed by the code letter "A" which is capable of being used with any of the following devices, whether or not equipped with such devices: (a) cutting devices for slitting the film into strips suitable for capacitors, (b) shadow masks or similar devices to achieve uncoated strips, (c) controls for the automatic correction of the coating process, and (d) special devices to burn out the metal deposit on pinholes to prevent
electrical faults in the capacitors; and specially designed parts and accessories, n.e.c.'
71980(21)A Rocket launching ramps, towers, and II...... 11411 I] QSTVWYZ '! 500 II 500 11 0 II
associated equipment for meteorological rockets;
and specially designed parts, n.e.c.
71980(22)G Commodities listed in 399.2, Inter- fl...... 11418 11 SZ if H I I
pretation 29.
71980(22a)B Nuclear reactor fuel fabrication ma- 11 ...... 1 41211 QSTVWYZ 11 0 i 0 i 0 11 R
chinery and equipment, n.e.c.; and specially designed parts and accessories, n.e.c. (Also see 378.5 for special provisions.)
71980(23)J Commodities not listed above, classi- i ...... 11418 0 QSWYZ If 111,000 II
fled under Schedule B Nos. 719.8005 through
719.8095. (Specify by name.) (Also specify 7-digit Schedule B No.)
7199(1)A Molding boxes and molds for artillery II No. jJ 421 I1 QSTVWYZ 5 5009 0 Il 0 i
molding or casting.
7199(2)A Pipe valves specially designed for nu- I Lb. Ii 401 11 QSTVWYZ If 100 II 100 I 0 il
clear reactors; and specially designed parts.
(Also see 378.5 for special provisions.)
7199(3)A Valves, 1 inch or more in diameter, fitted if Lb. 1I 411 11 QSTVWYZ I1 1009 100 II 0 II
with bellows seal, and wholly made of or lined
with aluminum, nickel, or alloys containing 60 percent or more nickel; and specially designed parts, n.e.c. (Give
full specifications.)
7199()A Valves, cocks, or pressure regulators II Lb. II 411 11 QSTVWYZ II 500 II 500 11 0 i
(a) specially designed to operate at temperatures
below minus 3640 F. (minus 220" C.), or (b) with all flow contact surfaces made of or lined with 90 percent or more tantalum, titanium, or zirconium, either separately or combined, except materials containing more than 97
percent and less than 99.7 percent titanium; and specially designed parts, n.e.c. (Give full specifications.)
7199(5)A Gaskets (joints) made of polymeric sub- 1 ..... I 221 11 QSTVWYZ II 100 I1 100 11 0 1I P4 stances as defined in 399.2, Interpretation 18(a). (Specify name and value of substances and total value of other materials.)
7199(5a)B Gaskets (joints) made of thermally I ......II 222 I QSTVWYZ II 100 11 100 1] 0 !
stable polymeric substances as defined in 399.2,
Interpretation 18(b). (Specify name and value of substances and total value of other materials.)
7199(6)G Commodities not listed above, classified If ...... 11218 11 SZ 0 I II I
under Schedule B Nos. 719.9120 through 719.9900. (Specify by name.) (Also specify 7-digit Schedule B No.)


Appendix C. Country Groups

Country Group Q Western Area:
Romania Bolivia
Country Group S Chile (including the islands Sala-y-Gomez,,
Southern Rhodesia Juan Fernandes, San Felix, San Ambrosio and Easter Island)
Country Group T Ecuador (including the Galapagos
North America Islands)
Northern Area: Eastern Area:
Greenland Argentina
Miquelon and St. Pierre Islands Brazil (including the islands St. Paul,
Southern Area: Fernando Noronha, and Trinidad (in
Mexico (including Cozumel and Revilla South Atlantic)
Gigedo Islands) Falkland Islands
Central America: Paraguay
British Honduras Uruguay
Costa Rica Country Group V
El Salvador All countries not included in any other counGuatemala try group (except Canada).
Honduras (including the Bay Islands) Country Group W
Nicaragua Poland
Panama, Republic of Country Group T
Bermuda and Caribbean Area: Albania
Babamas Bulgaria
Barbados Czechoslovakia
Bermuda Estonia
Dominican Republic German Democratic Republic (including
French West Indies East Berlin)
Haiti (including Gonave and Tortuga Hungary
Islands) Laos
Jamaica Latvia
Leeward and Windward Islands Lithuania
Netherlands Antilles (formerly Curacao, Outer Mongolia
N.W.I.) People's Republic of China (excluding ReTrinidad and Tobago public of China (Taiwan) (Formosa))
South America Union of Soviet Socialist Republics
Northern Area: Courary Group Z
Colombia North Korea
French Guiana (including Inini) North Vietnam
Guyana (formerly British Guiana) South Vietnam
Surinam (Netherlands Guiana) Cambodia
Venezuela Cuba


Appendix D. Office of Export Administration; Organization and Functions
.1 heOffcecitheDiecor ncuds:Advisory Committees;' car Iry out bureau .T heieo he Director whi ncndes:r emergency readiness and planning fun .cthe Diormulatoshpan and exctono doirc tions; collect and disseminate statistics tnd poramsof thdexeOffion ofmplmens on requests made to U.S. exporters to
an rgsof the xport Adinitration-c cooperate In restrictive trade practices or tatiol fteEpotAmnsrtionAtboycotts; and prepare the semi-annual of 1969, as amended; the Deputy Director rpr fteSceayo omreo
wosand pssrform the funection of the Export Administration to* the President Office an efr h ucin fteand the Congress, and prepare all other
Director in his absence; and the Operating Committee (OC) Chairman, who OEA publications and reports.
shal diecttheOC, he ommrceDe-.04 The Compliance Division shall
shalltdiet itrenc stenComrcafevel ensure compliance with the export adwartkent cminteenc senrorg shaff leve miitration regulations, develop Intelworkain committe through whihins ligence information regarding areas of fomaton, advieamns polic posios possible export administration violaforom d o ith decrmnts andr axenciesr tions, Investigate suspected violations, concernd wbith d controsoer Dexportsmare and prepare cases on violations for resouht I an obtegned bytDpartm ent. ferral to the Hearing Commissioner Thenc 0coImaninteea artore drinr through the Office of the General Counagency commasitte strutrexaddressong sel or to the Office of the General Countrolc ailues aoitedvwitheor Coni- sel for other legal guidance or action; treosand incr lues CE a the AdvsrsCmi- promote compliance with export admin-siteeant eprtar Pol (and-a the Istration clearance regulations; develop sdistnitSertary evel) Bad theExrt and coordinate methods and systems to
admntratin levew Boar OfEARoftB reduce paperwork and simplify export
aety he siatinet evec.Ter Ofeof Eate documentation and clearance proceDeputy TaesIstn recrnsber for East-in dures;, and maintain liaison with the Whes Extde iSereponibl f o proidin Bureau of Customs, U.S. Postal Service, the Executve Secary funCtin of and other Government and private orthCEP sand seei ths capaciB Themno ganizatbons on export administration Dith 00 s seineths chaplacmistTer compliance and facilitation matters. adIconhisndeionee sihh aDner .05 The Short Supply Division shall ans fic cof~uci t the Deea onepartn- administer short supply commodity conforeth Oepofrth Gnrl Culonsl end trol programs and monitor exports and fores theuexport ctrol reutionspant- contracts foe exports when commodities programs requonirited undcar ot DExpart are in present or potential short supply Amntatsonibiltie uf16, or likely to have an inflationary Impact. AdmOistratio Acteen ofe 199,as antd In addition, the division shall coordinate Then oficeoshaittepeseln th DEpart- the preparation of weekly and/or West oxng mte Detor wihalEast- monthly reports of monitoring results, Wevs ecang ie. the Doirectora u and the analysis of short supply activipeviseand dirpoetstefloin:rai ties In the semi-annual report to the
.02Thoea component: Dviio Congress. Further, the division shall be
sh02 Thveo Poc enPanin Dioiio- responsible for the advance planning port deverlolcmention fo aplex-t and proper programming necessary for sprtfi countries t ombeoappied tnd a continued smooth and effective Imsecifica couta;rieacommdtes diso plementation of current and new short stchnicalcdatan recmendth dppitso supply programs including monitoring wich ofeen cera lics appluiction activities. This division also has clearwhichms present peia polcartsecurty ance responsibility within DIBA for all
certain committees and working goups .06r Thepl licningivisiosasae
of the Department of State's Economic .0below:sngdviinsa sae
Defense Advisory Committee (EDAC) blw
and coordinate Department poicies and Computer Division, Capital Goods and
programs concerning United States and Production Materials Division, Elecinternational export controls and U.S. tronic Equipment Division
economic defense; and represent the Each of these divisions shall for the
Department on national security andPrdcsad eltd ehnalaa
foreign policy matters involving exportprucSad eltd ehnal aa
controls before the Operating commit- under its Jurisdiction, administer contee of the Advisory Committee on Ex- trols over exports in accordance with the
port Policy(ACEP). Export Administration Act, as amended,
.03 7bhe Operatione Division shall and the policies and procedures estabDroce&SslicensetaDDlications: develon in lished by the Office of Export Afdnisternal operating procedures; conduct rto:demieadakaporae
public contact activities; issue U.S.trlo:demieadakaporae Import certificates; prepare analytical' action on export license applications; and statistical reports on export con- conduct technical analyses of products
trol activities; develop and Publish ex- and technical data Including potential port control regulations and procedures end-use applications, to determine and as well as instructions fbr Foreign recommend the extent of controls to be
Service Officers; provide staff support to applied; and render assistance to industhe Export Administration Technical. try and other Government agencies on
export administration problems within
its Jurisdiction."


AD7enlix Export Licenses Approved and Reexports Authorized (sample issue)


icenses- Approved and

or -Reuexports; Authorized

U.S. DEPARTMENT OF COMMERCE/Domestic and International Business Administration

Bureau 91 East West Trade Office of Export AdminMrstioa


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Appendix F. Denial and Probation Orders (sample page)

Effective Expiration Federal Register
Name and Address Date Dates Export Privileges Affected Citation

L.tiers, Andre 7/1183/71 7/13/76 General and validated licenses. all mmoditie. F.LR. 1048
29 rue Victor Hugo any destination, also exports to Canada. 7/18/71
Puteaux, France, and
13 rue des Sablons
Mareil-Marly,. Franc.

Levee and Co. 1/81/5 Duration General and validated licenses, all commodities. 21 F.R. 7T-7r
Room 604. Fukoku Blds. any destination, also exports to Canada. 2/6
2-Chome. Chlyoda-Ku
Tokyo, Japan. and
60 Queen's Road Central. Hong Kong

Lewo. Joseph, also known as 12/12/68 Indefinite General and validated licenses, all commodities 33 F.R. 1826
Joe Lewo. Joseph Jeuda Levos any destination. also exports to Canada. 12/15/68
Joseph Levo. and Joseph Liebow
1400 Pine Avenue West
Montreal. Quebec. Canada

Li. Haiu Kuang 1/31/56 Duration General and validated licenses, all commodities. 21 F.R. 776-77TT
(alias S.K. Lai) any destination, also exports to Canada. 2/3/6
Room 604, Fukoku Bldg.
2-Chome. Chiyoda-Ku
Tokyo. Japan. and
60 Queen's Road Central. Hong Kong

Liebermann, Bernard 8/ 8/49 Duration General and validated licenses,. all commodities. 14 F.R. 4918
(alias Robert Govaerts) any destination, also exports to Canada. 8/9/49
66 Rue du Rocher
Paris 8,. France, and
60 Rue Ravenstein
Brussels. Belgium

LUntaad. D. N.V. Transport 10/27/66 (On probation 20 F.R. 8226
en Handelmnatschapplj from 10/27/66 11/2/66
68 Coolsingel. Bouragebouw for duration)
Rotterdam. Netherlands

Lincaloy Bahis Trading Co. 12/28/71 Until General and validated licenses, all commodities* F.R. 2617
Grand Cayman further any destination, also exports to Canada. 12/29/71
Grand Cayman Islands. B.W.I. notice (Party related to Robinson. Lincoln. et al, S. P .R. 6970
which see.) 8/23/72

Lin calo)y Co. 12/23/71 Until General and validated licenses, all commodity, 86 FPR 26173
Linc-aloy Inc. further any destination, also exports to Canada. 12/9/71
West Hazleton. Pa.. and notice 7 F.R. 690
Aguadilla, Puerto Rico, and 8/28/72
Grand Cayman
Grand Cayman Islands. B.W.I.

Lincedt Parts 12/23/71 Until General and validated licenses, all commodities, 36 F.R. 26178
Aguadilla. Puerto Rico f urther any destination, also exports to Canada. 12/29/71
notice (Party related to Robinson. Lincoln, et ~. 37 F.R. 5870
which see.) 5/23/72

Ling Dynamic Systems Ltd. 2/2/78 6/1/76 38 F.R. 4001
Baldock Road (On probation 2/9/73
Royston. Hertfordshire from 6/2/73
England to 6/1/76)
Ling Electronics Division. Altec 2/2/73 2/1/76 38 P.R. 4002
Corp. (On probation 2/9/73
1616 South Manchester Ave. from 2/2/78
Anaheim, Calif. 92808 to 2/1/76)

Lipplg, F. O, doing business as 7/ 9/68 Duration General and validated licenses, all eommoditiel 23 V.,. 6310
Elimex any destination, also exports to Canada. (Party 7/12/8
Aposteinkloeter 21-26 related to Fleschner. Richard, which see.)
Colowne. West Germany


Appendix G. Sources

Export Administration Act of 1969, as amended (50. U.S.C. App. 2401-2413).

Export Administration Regulations (15 C.F.R. 368-399.2).

Federal register, v. 26, no. 100, May 25, 1961, p. 4487 (E.O. 10945);
v. 41, no. 43, March 3, 1976, p. 9085 (E.0. 11907); v. 41, no. 55,
March 19, 1976, p. 11592 (U.S. Dept. of Commerce Order No. 46-2,
Admt. 1).

Statements before the Subcommittee on International Trade and Commerce,
Committee on International Relations, U.S. House of Representatives,
presented by:

Downey, Arthur T., Deputy Assistant Secretary of Commerce f or
East-West Trade, U.S. Department of Commerce, March 15, 1976;

Fasick, J. Kenneth, Director, International Division, U.S. General
Accounting Office, March 11, 1976;

Glitman, Maynard W., Deputy Assistant Secretary of State for International Trade Policy, U.S. Department of State, March 15, 1976;

Shields, Roger E., Deputy Assistant Secretary, International Economic
Affairs, U.S. Department of Defense, March 15, 1976.

U.S. Department of Commerce. The United States role in East-West trade;
problems and prospects. Washington, August 1975.

U.S. General Accounting Office. The Government's role in East-West trade-problems and issues; summary statement of report to Congress.
Washington, February 4, 1976., 84 p.

Invaluable assistance was rendered in the preparation of this paper by
the following officials of the Office of Export Administration,
U.S. Department of Commerce:

Lawrence J. Brady, Deputy Director, OEA
Converse Hettinger, Director, Short Supply Division
Charles C. Swanson, Director, Operations Division
Edward P. Walinsky, Director, Policy Planning Division
John A. Shyburg, Acting Director, Compliance Division
Eugene W. Oakes, Compliance Division



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