INCREASING INTERNATIONAL COOPERATION FOR MULTILATERAL ENFORCEMENT BETWEEN COCOM MEMBER COUNTRIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001800040009-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 21, 2016
• Document Release Date: August 11, 2008
• Sequence Number: 9
• Content Type: REPORT

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INCREASING INTERNATIONAL COOPERATION FOR
MULTILATERAL ENFORCEMENT BETWEEN COCOM MEMBER COUNTRIES
INTRODUCTION
1. Increased Soviet threat re: technology transfer
In the past eighteen months, the COCOM Subcommittee on Export
Controls, which normally meets every three years, held three
meetings to discuss the possibility of increasing international
.cooperation between the investigative services of COCOM member
countries. The United States believes those meetings were
productive and strongly urges t-he Subcommittee to continue its
efforts in this direction because the problem of illegal technology
transfer has increased significantly in recent years. The Soviet
Union is engaged in a massive and centrally-coordinated effort to
acquire advanced Western technology.
2. Soviet methods of acquiring Western technology
The Soviet's have developed a vast array of methods to acquire
advanced Western technology. These include the following: illegal
sales, end-user diversions, and third-country diversions; hostile
Not referred to
DOC. Waiver
applies.
State Dept. review completed
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.intelligence. service-directed trade (including the use of
communist-owned but locally-chartered firms); industrial espionage;
agents-in-place; compromised firms; and communications intercepts.
The Soviets employ these methods singly or in concert, depending on
,;
their interest in acquiring a particular .technology, as well as the
i'
obstacles imposed by Western export control regulations and
counter-intelligence activities':
The Soviets have also used their bloc satrapies as surrogates in
their efforts to acquire advanced Western technologies. The
subsequent "leakage" has increased significantly in the wake of
Afghanistan and the tightening of- COCOM's controls on the transfer
of high technology to the Soviet Union. These surrogates are also
adept at exploiting cross-national ethnic allegiances in coopting
Western scientists and businessmen.
3. Targets and changing nature of Soviet acquisition efforts
Current Soviet procurement efforts are concentrated in the following
fields: semiconductors and microelectronics; computers, including
both hardware and .software; guidance, sensor, communications, and
propulsion systems; and related production technologies, including
machine-tools.
In addition to their traditional emphasis on Western weapons
systems, the Soviets increasingly have sought to acquire advanced
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Western production technologies and know-how. Rather than copying
entire-Western weapons systems (as they did in the 1950s and 1960s),
the Soviets increasingly have sought critical components in such
systems--and subsystems, focusing particularly.on their design
concepts and manufacturing processes. This allows the Soviets to
use such Western component-designs, employing their own industrial
capabilities to meet new military requirements. This trend also
reflects a growing Soviet awareness of the importance of such
industrial technologies to gains in innovation and efficiency in
manufacturing. This is particularly true with respect to key
sectors of the Soviet economy, such as micro-electronics, computers
and machine tools, in which scalar .economies and high degrees of
precision are critical elements in defense-support production.
Finally, the Soviet acquisition effort recently has begun to
emphasize new, emerging technologies. Because many of these are the
result of civilian research and development activities in
universities or corporations, they are not uniformly protected by
national security controls, as controls are often applied to such
advances only after their specific military applications are
identified. By keeping abreast of such Western developments, the
Soviets .hope to identify these applications with (or, if possible
before) the West.
4. Soviet acquisition efforts in COCOM member states
Soviet efforts to acquire advanced technology have been concentrated
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largely in the member-states of COCOM where such technology
principally lies. In the United States, the focus of Soviet
collection activities centers on the nexus of military
installations, defense contractors, high technology .firms, and
universities and research institutes involved in the development of
new and emerging technologies having `future military applications.
In Japan and-the countries of Western Europe, Soviet efforts to
acquire advanced Western technology have two principal foci. First,
in and of themselves these countries constitute vast reservoirs of
'those advanced technologies essential to innovation in Soviet
defense - and civilian-related industries. This fact alone makes
Western Europe and Japan "alternative sources of supply" for the
Soviet Union in its efforts to acquire Western technology. Beyond
this, Japan and the .countries of_ Western Europe receive classified
and proprietary technologies from the US Government and US-based
corporations, respectively. The loss of such sensitive technologies
compromises the West's qualitative superiority in advanced weapons,
and thus endangers US, Western European, and Japanese security.
5. Increased Soviet acquisition efforts in third-world countries
The Soviet Union also seeks to acquire advanced Western technology
via the modernizing countries of the third world. Many of these
countries have accepted and even encouraged the presence of Western
multinational corporations in an attempt to 'foster rapid
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industrialization. This access to sources of advanced Western
technology makes such countries targets for Soviet acquisition
efforts. The success of such efforts depends not only on the extent
of Soviet .presence and acceptance in Third World countries but also
on the presence or absence of Allied provisions for the control of
re-exports of~Western technology.
.Diversions of strategic commodities and technology through non-
COCOM countries have increased significantly in recent years and now
pose a serious threat to our common security interest. The Soviet
Union and its Warsaw Pact partners are aware that most COCOM members
do not exercise controls over exported strategic commodities once
they have-been received in the country of destination. In addition,
the number of original equipment...manufacturers established in non-
COCOM countries has also increased markedly." These companies are
regularly obtaining and incorporating COCOM-embargoed components in
their equipment which is then freely available for export to
proscribed destinations.. Often this same equipment could not be
shipped from a member country without COCOM review.
U.S. EFFORTS TO IMPROVE ENFORCEMENT OF EXPORT
CONTROL LAWS
1. Compliance Division, Office of Export Administration, U.S.
Department of Commerce
In the United States, responsibilities are divided among various
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agencies and units of the Government.
The Department of Commerce's Office of Export
Administration, Compliance Division, is responsible for
enforcing export controls set out in the Export
Administration Act 'of 179, investigating reports of
i
non-compliance, determining whether violations occurred and
referring violations'~to.~he Office of the General Counsel
l
for administrative enforcement proceedings or possible
t
referral to the Department of Justice for criminal
prosecution.
2. Responsibilities of other U.S. Government Agencies
The Department of State's Office of Munitions Control is
responsible for the administration of the Arms Export
Control Act. This act governs all exports of munitions and
other military items from the United States. In essence,
all munitions must be properly licensed by OMC before they
C
can be legally exported from the United States. Failure to
do so or obtaining the license through illegal means is a
violation of the law.
-- The Department of Treasury's U.S. Customs Service has been
delegated by the Department of State to enforce the
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provisions of the Arms Export Control Act. These
enforcement activities include investigations of purported
violations of the Act and making arrests, seizures, and
_detentions if necessary..- Customs has also been granted
ancillary jurisdiction for enforcement of the Export
Administrion Act by the Department of Commerce. Customs
both initiates its own investigations of purported
violations of-this "law and also assists the Compliance
Division when requested in conducting investigations.
Customs also can and does take enforcement actions for this
act, when necessary, such as making arrests, seizures, and
detentions.
-- The Department of Justice's Federal Bureau of Investigation
monitors the activities of proscribed-country individuals
and investigates espionage and other. activities, which may
sometimes involve export control violations.
-- The Department of Justice is the basic prosecuting arm of
the U.S. Government and is responsible for prosecuting
export control violations, as warranted.
-- The Department of State's Economic Defense Officers
stationed at Embassies and Consulates abroad represent U.S.
interests on export control matters and perform certain
checks to ensure compliance with U.S. export control
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regulations.
-- -The Department of Energy monitors the shipment of, and
advises on transactions involving, nuclear-related
equipment and materials.
-- The Department of Defense analyzes ,and provides advice on
the security implica-t~ions Qf individual transactions.
-- U.S. intelligence agencies provide information relating to
.acquisitions by COCOM-proscribed countries.
We have taken a number o-f steps to improve coordination among these
agencies and to ensure that the activities of each are focused
effectively on export controls. We are pleased with our results.
In the past 24 months we have successfully prosecuted five
individuals and one company for criminal violations of the export
control laws. Administrative action has been taken against twenty
individuals and thirty three companies. Other administrative
.proceedings and criminal prosecutions are in progress.
Appendix 1 contains brief descriptions of representative criminal
and administrative cases involving COCOM-controlled commodities and
technology.
3. Industrial education
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RET
The Compliance Division of the Office of Export Administration
devotes considerable effort to acquainting the exporting community
with its export control enforcement program and promoting public
awareness of export controls. Four specific examples of the methods
used are discussed below.
Speaking engagements are an excellent way to publicize the
enforcement program., During the past two years, compliance
personnel addressed senior executives and managers of some of the
largest manufacturing and export firms in the United States. In
.addition, speeches were delivered before various seminars and
symposiums for attorneys and marketing and export control
executives. These speaking engagements provided an opportunity to
acquaint several hundred exporting firms, including some foreign
subsidiaries, with United States enforcement and administrative
procedures such as the sanctions that may be imposed for violations
of export controls.
Export Compliance Inspectors from the Compliance Division make
unannounced visits to air, sea and overland facilities at ports of
exit throughout the United States where they conduct selective
examinations of export documents and inspections of related
shipments to determine compliance with the Export Administration
Regulations. On these occasions, the inspectors acquaint a
different segment of the exporting community, the freight forwarders
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and carriers, with export control procedures and requirements.
The Compliance Division issues warning/educational type letters to
the parties involved for various violations considered not serious
enough to warrant criminal or administrative proceedings. The
Division. recently .revised its procedures so that warning/educational
letters are sent to the chief executives of the firms involved
instead of lower level export managers. This focuses greater
attention on the compliance action and helps to promote future
compliance by the firm.
When criminal or administrative sanctions are imposed on parties
involved in serious violations of export controls, an official press
release is issued by the Department of Commerce. The press releases
a.re distributed to international wire services as well as the local
news media. This acquaints the exporting community as well as the
general public with the export control enforcement program and
serves as a deterrent to potential violators.
U.S. Customs is constantly conferring with various export industry
spokesmen concerning the export control laws. These spokesmen
include manufacturers who export controlled items, freight
forwarders, customs brokers, and carriers including airlines and
shipping companies. .This liaison is conducted both by Customs
domestic offices and by its representatives and attaches stationed
at U.S. diplomatic posts overseas. The liaison includes
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explanations of the various export control laws, proper procedures
to be met, and source development.
In September, 1978 the Federal Burea-u of Investigation (FBI)
instituted a program designed to develop information concerning
targeting of .classified industrial products by hostile intelligence
services (HIS). This program is known as Development of
Counterintelligence Awareness (DECA), and calls for a personal
contact by a FBI field representative with an executive of as many
industrial facilities handling classified contracts as FBI field
resources will permit.
There are approximately 11,000 classified facilities in the U.S.,
and the FBI is concentrating on those facilities which deal in a
product known or presumed to have been targeted by HIS.
As of August, 1981 the FBI has established and is maintaining
contact with 5,786 classified defense contractors. In many
instances these contacts have directly or indirectly resulted in a
significant number of reports to the FBI of HIS activity, and these
reports have allowed the FBI to initiate appropriate investigative
activity.
The actions taken to educate industry, as described above, have
increased the visibility of the export control enforcement community
in the United States and abroad and thus enhanced its enforcement
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posture in the exporting community. Therefore, we suggest that it
might be appropriate for the export control enforcement agencies of
other member governments to undertake similar means to acquaint
their exporting communities with their export control enforcement
programs .
PROPOSALS TO IMPROVE MULTILATERAL ENFORCEMENT
1. June 1981 COCOM Subcommittee meeting-overview
a. A number of proposals were agreed to by the Subcommittee on
Export Controls in the June 1981 meeting. The U.S. fully
supports these proposals.., which are set forth as Appendix
II, and urges the Committee to adopt them.
b. In addition, there were other proposals discussed at the
Subcommittee meeting that were not adopted which we believe
warrant further discussion. These are:
i. Establishment by member governments of .statistics
similar to those now deposited at the Secretariat
concerning sales to all non-member, non-cooperating
country destinations of commodities and technology
whose export to a proscribed country would require
prior Committee review, and the submission of such
statistics to the Committee on a regular basis
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"Statistics similar to those now provided to the
Secretariat should be maintained by each member
government and supplied to COCOM on a regular basis
regarding sales to all non-000OM and non-cooperating
country destinations. of commodities and technology
that would require COCOM review prior to export to a
proscribed destination. -These statistics will
identify the specific technologies and equipment being
sent to third countries, and help identify possible
sources or routes. of diversion through non-000OM and
non-cooperating countries."
Restated: "Member governments consider the value and
the possibility in the future of supplying statistical
information on export to third country destinations of
commodities and technology which would have required
Committee review prior to export to a proscribed
country."
The French, Japanese and Norwegian Delegates were
unable to agree to the alternative text proposed by
the United States which the Belgian, Canadian, Danish,
German, Italian, Netherlands, Turkish and United
Kingdom were prepared to accept. The United States
delegate withdrew the proposal.
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ii. Application of the IC/DV system to exports to member
countries or cooperating countries of all commodities
whose export to a proscribed country would require
prior Committee review
"The Import Certificate/Delivery Verification (IC/DV)
procedure should be applied to the export to all
commodities (whose export to a proscribed destination
would require COCOM review) to another COCOM member
country'or cooperating country."
CONCLUSION: The Subcommittee encouraged member
governments to apply the IC/DV system to prevent
diversions.
The Subcommittee concurred in this suggestion and
agreed to resume the study of the possible extension
of the application of the IC/DV system at its next
session.
iii. Forwarding of importing country's DV directly to the
export country's export control services
"The DV procedure should provide for the DV to be
forwarded by the importing country directly to the
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exporting country's export control authority."
The proposal did not meet with unanimous approval.
The Subcommittee Chairman thought this proposal might
be reviewed at the Subcommittee's next session, should
the Japanese delegation be prepared to reconsider
their position.' Thy Japanese delegation were not in
favor of changing the present procedure.
iv. Possibility of establishing a procedure to require the
owner of any embargoed product imported pursuant to an
IC to notify any subsequent domestic purchaser of that
product that its export is governed by the terms of
the IC
"The Subcommittee should consider whether or not there
is a need to provide for notification of subsequent
domestic purchasers of items imported pursuant to an
IC regarding license requirements associated with its
reexport to a proscribed destination. Consideration
should also be given as to how such notification could
be implemented and the educational value of such a
procedure."
All delegations having expressed their views, the
United States delegate said that, in the light of
T
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these views, his authorities would continue their
study of this matter, especially the following
possibilities:
a) the IC might serve to encourage the importer to
inform subsequent purchasers of the goods of the
export control requirements to which they were
subject;
b) the IC might indicate the final end-use of the
goods in the importing country;
c) review the question of the standardization of ICs.
vi. Com ilation of a compendium of~~the COCOM export
control laws, treaties, mutual assistance agreements
and other agreements between member countries and
cooperating countries
"A Compendium of member countries export control laws,
treaties, mutual assistance agreements and other
agreements between COCOM members which provide the
basis for cooperation of COCOM cooperating countries
should be compiled by the Secretariat with the
assistance of member delegations."
CONCLUSION: The Subcommittee agreed that member
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