United States General Accounting Office GAO Report to the Chairman and Ranking Minority Member, Committee on Armed Services, House of Representatives September 1999 EXPORT CONTROLS 1998 Legislative Mandate for High Performance Computers GAO/NSIAD-99-208 Contents Letter 2 Appendixes Appendix I NDAA Notifications and License Actions, February 3, 1998 - March 19, 1999 16 Appendix II Decisions for HPC License Applications Submitted Directly to the Commerce Department, January 1, 1998 - March 19, 1999 18 Appendix III Reasons Why NDAA Post-Shipment Verifications Were Not Completed 19 Appendix IV Comments From the Department of Commerce 20 Appendix V Comments From the Department of Defense 23 Tables Table 1: NDAA Post-Shipment Verifications on High Performance Computer Exports to Tier 3 Countries, November 18, 1997 - November 17, 1998 11 Abbreviations ACDA Arms Control and Disarmament Agency HPC high performance computer MOFTEC Ministry of Foreign Trade and Economic Cooperation MTOPS millions of theoretical operations per second NDAA National Defense Authorization Act PSV post-shipment verification Page 1 GAO/NSIAD-99-208 Export Controls United States General Accounting Office National Security and Washington, D.C. 20548 International Affairs Division B-283584 Leter September 24, 1999 The Honorable Floyd D. Spence Chairman The Honorable Ike Skelton Ranking Minority Member Committee on Armed Services House of Representatives In 1996, the executive branch streamlined its export controls for high performance computers by removing licensing requirements for most exports to civilian end-users while focusing control on military and proliferation-related end-users. This streamlined process made exporters responsible for determining if they needed to apply for an export license because they were selling a computer to a military or proliferation-related end-user. In 1997, however, several high performance computers were exported to Russian nuclear weapons laboratories and to a military end-user in China without a license. Concerned that exporters may not be aware of the activities of the end-users they sell to, Congress included a provision in the fiscal year 1998 National Defense Authorization Act (P.L. 105-85) to require exporters to notify the Commerce Department of any proposed high performance exports to countries that pose a concern for military or proliferation reasons1 to determine if these exports need a license. The act also requires Commerce to verify that high performance computers exported to countries of concern are being used by the appropriate end-user for the intended purpose. In response to your request, we determined (1) whether exporter notification to Commerce of proposed sales of high performance computers to countries of concern has resulted in license applications and what final action was taken on these licenses and (2) how Commerce is conducting post-shipment verifications of the use of high performance computers after their export to these countries. 1 Countries that pose such a concern include China, Russia, India, Pakistan, Israel, and Egypt. Page 2 GAO/NSIAD-99-208 Export Controls B-283584 Results in Brief Under the review process required by the National Defense Authorization Act, most of the 938 proposed exports of high performance computers to what were believed to be civilian end-users in countries of concern have generally been allowed to continue without export licenses. Specifically, from February 3, 1998, when procedures implementing the new National Defense Authorization Act became effective, to March 19, 1999, reviewing agencies2 allowed 828 proposed high performance computer exports to continue without a license, but they required license applications for 101 proposed exports because of military, proliferation, or foreign policy reasons such as human rights violations.3 The majority of the objections made by reviewing agencies to the 101 proposed exports were based on concerns that the proposed end-users of the high performance computers might have been involved in military or proliferation-related activity. Subsequently, of the 101 license applications required by the National Defense Authorization Act review, 16 were approved and 6 were denied. The remaining 79 were returned to the exporter without action.4 Licenses that were approved had additional conditions placed on the reexport or end-use of the high performance computers. The majority of these applications involved China, India, and Israel. After the National Defense Authorization Act procedures were implemented, licenses were required for nine exports of high performance computers to end-users of concern who had previously received high performance computer exports without a license. Post-shipment verifications confirm the physical location of the high performance computers and, to the extent practical, verify if they are being used as intended. However, there are limitations to determining end-use. While the National Defense Authorization Act contains no time limit for completing post-shipment verifications, Commerce has completed verifications on 104 high performance computer exports, or about 2 The reviewing agencies include the Departments of Commerce, Defense, Energy, and State. The Arms Control and Disarmament Agency also reviewed cases until March 31, 1999, when the Agency was merged with the State Department. 3 Nine additional proposed exports were classified as “incomplete” and returned to the exporter without action. 4 Commerce will return license applications “without action” to exporters at their request or because the required documentation has not been submitted to proceed with the application. Because reviewing agencies have determined that a license is needed to export, returning license applications without action in effect blocks the export. Page 3 GAO/NSIAD-99-208 Export Controls B-283584 27 percent of those verifications required on the 390 high performance computers exported during fiscal year 1998. In a report to Congress, Commerce stated that all 104 post-shipment verifications were favorable, meaning that the computer had been seen during an on-site visit and that nothing was inconsistent with the license or the license exception. However, verification conducted by Commerce but not yet completed detected the possible diversion of two computers to a military end-user, in apparent violation of U.S. export control regulations. The Commerce Department has opened an investigation of these diversions. Of the 286 high performance computer exports that have not yet been verified, almost two-thirds (187) involve exports to China. According to Commerce, the main reasons why these post-shipment verifications were not conducted were that (1) Chinese policy prior to June 1998 did not permit post-shipment verifications to be made or (2) the exports did not meet the requirements agreed upon in a June 1998 memorandum of understanding between the Department of Commerce and China’s Ministry of Foreign Trade and Economic Cooperation. Although the National Defense Authorization Act requires post-shipment verifications on all high performance computers exported since November 18, 1997, whether licensed or not, Commerce believes that it is futile to seek to visit high performance computers exported to China before the end-use visit arrangement or without end-user certificates. In addition, they believe it would not be the most effective use of Commerce’s limited resources. Page 4 GAO/NSIAD-99-208 Export Controls B-283584 Background In 1996, the executive branch revised export controls and licensing conditions for high performance computers (HPC) based on the risks specific countries and end-users posed to U.S. national security. The executive branch organized countries into four tiers, with each tier after tier 1 representing a successively higher level of concern to U.S. security interests. Tier 3 contains 50 countries of concern for military or proliferation reasons. The executive branch also established separate control levels for different types of end-users in tier 3. For end-users of military or proliferation concern, the controls require a license to export HPCs performing over 2,000 millions of theoretical operations per second (MTOPS). For civilian end-users in tier 3, the controls require a license to export HPCs that perform over 7,000 MTOPS. For exports of HPCs performing between 2,000 and 7,000 MTOPS, an exporter could ship the computers without a license,5 provided the exporter determined that the end-user was involved only in civilian activities.6 The revision did not affect export licensing requirements to the seven countries in tier 4 countries, for which the United States has a virtual embargo on all computer exports.7 The fiscal year 1998 National Defense Authorization Act requires an exporter to notify Commerce in advance that it proposes to export or reexport HPCs that perform between 2,000 and 7,000 MTOPS to civilian users in tier 3 countries. During a 10-day period, Commerce circulates the notifications to the Departments of Defense, State and Energy, and the Arms Control and Disarmament Agency (ACDA)8 for review. The NDAA requires a license to export if any of these agencies raises a written objection to the export without a license. According to National Security Council guidance, agency objections shall state whether the proposed 5 Under 15 C.F.R. Part 740 of the Export Administration regulations. 6 On July 1, 1999, the executive branch further revised licensing levels for tier 3 countries. The levels for civilian end-users were raised from 7,000 MTOPS to 12,300 MTOPS effective immediately, and for military end-users from 2,000 MTOPS to 6,500 MTOPS effective in 6 months. The executive branch also raised the National Defense Authorization Act (NDAA) notification levels from 2,000 MTOPS to 6,500 MTOPS. By law, this change will take effect 6 months after the executive branch reports the changes to Congress. The revision does not affect the NDAA requirement to conduct post-shipment verifications on all exported computers over 2,000 MTOPS to tier 3 countries. 7 The seven countries are Iraq, Iran, Libya, North Korea, Cuba, Syria, and Sudan. 8 On March 31, 1999, ACDA was terminated as an independent entity, and its arms control and nonproliferation functions were merged with those of the State Department. ACDA therefore did not have a role in the NDAA process as a reviewing agency after March 31, 1999. Page 5 GAO/NSIAD-99-208 Export Controls B-283584 export represents a risk of diversion to a military or proliferation end-use or end-user of concern. If no objection is raised during the 10-day period, the exporter may ship the HPCs without a license. Exporters that want to ship HPCs to known military end-users or end-users of proliferation concern must directly apply to Commerce for a license; they do not go through the notification process. In addition, the NDAA requires Commerce to conduct post-shipment verifications on all licensed and unlicensed HPCs above 2,000 MTOPS exported to tier 3 countries. This requirement applies to all HPCs exported from the United States on or after November 18, 1997, the date of enactment of the NDAA. NDAA’s Effect on HPC Of 938 HPC export notifications to tier 3 countries that were reviewed by Commerce between February 3, 1998, and March 19, 1999, the executive Exports branch agencies objected to 101 notifications and, as a result, these notifications were converted to license applications. (App. I contains a detailed breakdown of NDAA notifications, licenses, and license actions.) During this same time period, HPC manufacturers submitted 146 license applications directly to the Department of Commerce. (App. II contains a country breakout of license applications submitted directly to Commerce.) The Arms Control and Disarmament Agency and the Department of Defense raised most of the NDAA objections. Most of the license applications for which objections were raised were returned to the exporter without action, either at the exporter’s request or because Commerce had not received additional documentation to act on the application. Executive Branch Agencies’ Of the 101 objections raised regarding the proposed HPC exports, ACDA Objections to Exports and the Department of Defense submitted 59 and 55, respectively; the State Department submitted 14; and Commerce submitted 3. The Department of Energy raised no objections. According to Commerce, an agency will often not object if an objection has already been raised by another agency. The majority of the objections were based on concerns that the proposed end-users of the HPCs might have been involved in some military or proliferation-related activity. This was particularly evident in ACDA’s objections to telecommunications end-users in China. Of ACDA’s 59 objections, 39 were for exports to China and 29 of those involved telecommunications end-users, which, according to ACDA officials, have close ties with China’s military. The HPCs could therefore contribute to the military’s command and control capability. The Defense Department had Page 6 GAO/NSIAD-99-208 Export Controls B-283584 similar concerns with several other civil entities in China about the risk of diversion of HPCs to military end-users/uses. State, ACDA, and Defense also raised objections based on proliferation concerns: they raised 21 objections over HPC exports to India, primarily because of sanctions imposed on India and Pakistan for the nuclear testing both countries had conducted in May 1998.9 Before the sanctions took place, objections had been made on proposed HPC exports to research institutes and government entities in India because of the risk of diversion to proliferation end-users/uses, such as missiles or nuclear weapons. State objected to two HPC exports to Chinese public security entities and one HPC export involving an intermediate consignee in Serbia based on foreign policy and human rights concerns. According to State Department officials, although National Security Council guidance requires that objections state whether proposed HPC exports represent a risk of diversion to military or proliferation end-users or end-uses, it does not rule out the use of foreign policy reasons other than proliferation as grounds for objections. However, Commerce disagrees with State on this matter. We found that from the NDAA review process, objections were made to nine proposed HPC exports to end-users that had previously received HPCs without a license.10 Of the nine proposed exports, four were for end-users in China, four were for India, and one was for Israel. The agencies raised objections on the four proposed HPC exports to China based on their potential diversion from telecommunication and university end-users to military and proliferation-related activities. Objections to the four proposed HPC exports to India were based on the sanctions imposed due to proliferation concerns. One objection to a proposed HPC export to Israel involved an Israeli university that might have had connections to proliferation-related activities. Commerce approved a license for one export and returned the remaining eight applications to the exporters without action. 9 The President imposed sanctions on June 18, 1998, under the authority of the Arms Export Control Act (22 U.S.C. section 2799aa-1). 10 These HPC exports, completed prior to NDAA review procedures, did not require a license under the regulations at that time, if the HPC was between 2,000 and 7,000 MTOPS and if the exporter believed the HPC was going to a civilian end-user. Page 7 GAO/NSIAD-99-208 Export Controls B-283584 Outcome of NDAA Of the 101 license applications required by the NDAA review, 16 were Notifications Converted to approved and 6 were denied. The remaining 79 were returned to the exporter without action. The 16 applications for licenses that were License Applications for approved included additional licensing conditions. The conditions, which Tier 3 Countries were the same for all 16 licenses, were that (1) no reexport or retransfer of the HPCs could be made without prior Commerce Department approval, (2) the end-user must comply with Security Safeguard Plans,11 and (3) the exporter must verify delivery and installation of the HPCs. Six licenses were denied for foreign policy, military, and proliferation reasons. For example, license denials of HPC exports destined for China involved research institutes that were reportedly engaged in military or proliferation activities, and license denials of HPC exports to India involved end-users that were engaged in missile proliferation activities. As previously mentioned, the majority of license applications required due to NDAA objections (79 of the 101) were returned without action. One reason that applications were returned without action was that the time period for exporters to submit additional information to process the applications (30 days) had expired. Typically, additional information is needed on end-users, remote access end-users, or the entity that will install and/or service the HPCs. The exporter must resubmit a regular export license application if it obtains the required information after the first application has been returned. Applications were also returned at the exporters’ requests for various other reasons: the end-user sometimes canceled the order, changed the HPC’s MTOPS level to a higher or lower capability, or changed the proposed end-use. For example, in some cases, the exporter canceled the license application and substituted exports of HPCs that performed below 2,000 MTOPS and therefore did not require a license. Commerce has no system for tracking resubmissions of license applications that were returned without action. The Department instead depends on the memory of its licensing officers or on exporters to inform the Department that they are resubmitting an application. According to a Commerce licensing officer, the Department received very few 11 Commerce may require that the exporter submit a Security Safeguard Plan signed by the end-user and, sometimes, also certified by the export control authorities of the importing country. The plan identifies a range of safeguards required by Commerce, which the end-user agrees to implement as a condition for receiving a license. Page 8 GAO/NSIAD-99-208 Export Controls B-283584 resubmissions of applications returned without action that were originally converted to a license application. Implementation of Section 1213 of the NDAA requires the Secretary of Commerce to conduct post-shipment verifications (PSV) on each HPC exported over 2,000 Post-Shipment MTOPS from the United States to a tier 3 country, whether licensed or Verifications Is unlicensed, on or after the date of the statute’s enactment, which was November 18, 1997.12 Commerce uses either export enforcement officers Incomplete and Has sent from the United States or Foreign Commercial Service officers from Several Limitations U.S. embassies or consulates to perform the PSVs. The PSVs confirm the physical location of the HPC and, to the extent practical, verify if it is being used as intended. However, there are limitations to determining end-use. While the NDAA contains no time limit for completing PSVs, Commerce has completed PSVs on 104 HPC exports, or about 27 percent of those verifications required for the HPCs exported during fiscal year 1998. Commerce reported that all 104 PSVs were favorable. However, a PSV conducted by Commerce that has yet to be completed detected the possible diversion of two computers to a military end-user, in apparent violation of U.S. export control regulations. The Commerce Department has opened an investigation. How Commerce Conducts The Commerce Department uses U.S. personnel from its Bureau of Export NDAA-Mandated Post- Administration or its U.S. and Foreign Commercial Service officers located at U.S. embassies and consulates to conduct NDAA-mandated Shipment Verifications post-shipment verifications on the use of HPCs. Export Administration teams, which typically comprise two agents, go to a country or a group of countries for a 2- to 3-week period to conduct PSVs and pre-license checks and to meet with businesses to educate them on U.S. export control regulations. During fiscal year 1998, Export Administration teams took two trips to Russia, one trip each to Israel and Egypt, and one trip to India to conduct PSVs. No trips were made to China. Commerce’s guidelines instruct the PSV officials to determine • what the serial number of the HPC is and, if possible, whether the machine has been upgraded; 12 The July 1, 1999, revision of licensing levels does not affect the NDAA requirement to conduct post-shipment verifications on all exported computers over 2,000 MTOPS to tier 3 countries. Page 9 GAO/NSIAD-99-208 Export Controls B-283584 • what the location of the HPC is, including a complete address, telephone number, fax number, and the name of a contact person, if the HPC has been resold or retransferred; • whether the HPC is being used in a manner consistent with the stated purpose; • whether anyone has remote access to the computer and, if so, who does and for what purpose; • whether the HPC is located in a secure area and whether the level of security seems consistent with the function performed or seems overly strict for a commercial facility; and • whether any activities seem inconsistent with the stated end-use, including indications of ownership or operations by a military organization or involvement of an organization in the design, manufacture, storage, use, or testing of nuclear, chemical, or biological weapons. When conducting a PSV, officials confirm that the computer has arrived at the intended location and either qualifies for a license exception (if it has been exported without a license) or is being used under the terms of the license. According to an Export Administration official, a favorable PSV means that an HPC has been seen during an on-site visit and that nothing was inconsistent with the license or the license exception. An unfavorable PSV means that an inconsistency was found between the actual end-use and the end-use intended for the export. The Export Administration’s Office of Export Enforcement may investigate the inconsistency, depending on its seriousness. In its report to Congress, Commerce said that two HPCs sent to a distributor had been sold to a military end-user in apparent violation of U.S. export control regulations and the matter is under investigation. A Significant Number of During the first year after enactment of the NDAA (Nov. 18, 1997, to Post-Shipment Verifications Nov. 17, 1998), 390 HPC exports were reported to Congress. PSVs had been completed on 104 (27 percent) of the total, and 286 (73 percent) had not Have Not Been Completed been completed (see table 1). Also, appendix III has a country-by-country breakdown of the reasons why PSVs were not conducted. Page 10 GAO/NSIAD-99-208 Export Controls B-283584 Table 1: NDAA Post-Shipment Verifications on High Performance Computer Exports to Tier 3 Countries, November 18, 1997 − November 17, 1998 Number of Number of PSVs Number of PSVs Percent not Country HPCs exported completed not completed completed China 191 1 190 99.5 Israel 82 42 40 48.8 Russia 33 21 12 36.4 India 29 20 9 31.0 UAE 20 11 9 45 Egypt 11 2 9 81.8 Saudi 8 2 6 75 Arabia Croatia 3 2 1 33.3 Kuwait 2 0 2 100 Ukraine 2 0 2 100 Algeria 1 0 1 100 Angola 1 0 1 100 Bahrain 1 0 1 100 Lebanon 1 0 1 100 Oman 1 0 1 100 Pakistan 1 0 1 100 Azerbaijan 1 1 0 0 Kazakstan 1 1 0 0 Serbia 1 1 0 0 Total 390 104 286 73 Source: Fiscal year 1998 National Defense Authorization Act section 1213 annual report. Two-thirds of the HPCs that have not yet been verified involved exports to China. According to the Commerce Department, the main reasons why these PSVs were not conducted were that (1) Chinese policy prior to June 1998 did not permit PSVs or (2) the exports did not conform to the June 1998 memorandum of understanding between Commerce and China’s Ministry of Foreign Trade and Economic Cooperation (MOFTEC), which is not legally binding. As shown in appendix III, 105 HPCs were exported to China after enactment of the NDAA in November 1997, but before June 1998, when the Commerce−MOFTEC arrangement went into effect. Chinese authorities would not allow PSVs to be conducted on HPCs shipped before June 1998 because of sovereignty concerns. Under the June Page 11 GAO/NSIAD-99-208 Export Controls B-283584 1998 arrangement, the Chinese government now allows the United States to conduct PSVs on HPC exports under certain conditions. However, PSVs could not be conducted on 82 HPCs shipped after the June 1998 arrangement because the exports did not conform to the arrangement. According to the Commerce Department, the 82 HPCs were shipped without a license and the exporters were not required to obtain a Chinese end-user certificate. An end-user certificate, issued by China, facilitates Commerce’s ability to conduct PSVs in China. It was not until January 14, 1999, that Commerce’s Bureau of Export Administration published regulations requiring exporters to obtain a Chinese end-user certificate for any computer over 2,000 MTOPS to China, whether under license or a license exception, and report the information to the Bureau. This requirement, however, became effective only for HPCs shipped after February 11, 1999. Although the National Defense Authorization Act requires post-shipment verifications on all high performance computers exported since November 18, 1997, whether licensed or not, Commerce believes that it is futile to seek to visit high performance computers exported to China prior to the end-use arrangement or without end-user certificates and also that it would not be the most effective use of Commerce’s limited resources. According to Commerce, 89 PSVs are planned for fiscal year 1999, or requests for these visits are pending at embassies or consulates. Many Export Administration trips are scheduled for Saudi Arabia, the United Arab Emirates, India, Israel, Jordan, Egypt, Russia, Pakistan, and China. Seven other PSVs were not done because in two cases the HPC exports were canceled, and in five cases the HPCs were exported to countries for which the NDAA does not require a PSV. Scope and To determine whether exporter notification to Commerce of proposed exports of HPCs to countries of concern have resulted in applications for Methodology licenses and what final action was taken on these licenses, we obtained data on NDAA notifications made by U.S. computer exporters from the Commerce Department’s export control database for January 1, 1998, to March 19, 1999. From this data, we quantified the number of (1) NDAA notifications made since procedures implementing the fiscal year 1998 NDAA became effective on February 3, 1998, to March 19, 1999; (2) objections executive branch agencies raised on these notifications during this period; and (3) license applications required from these objections and whether these licenses were approved, denied, or returned to the exporter without action. We also obtained the basis of agency Page 12 GAO/NSIAD-99-208 Export Controls B-283584 objections to NDAA notifications by interviewing agency officials, reviewing their files on the objections, and reviewing the types of end-users and end-uses. Further, using data from the Commerce Department export control database, we determined the reasons why licenses were returned without action and denied. In addition, we determined whether the executive branch is requiring licenses on end-users that previously received HPC exports without a license. We compared data on unlicensed exports to tier 3 countries from January 1, 1996, to September 30, 1997, with NDAA notifications that required a license from February 3, 1998, to March 19, 1999. To assess how the Commerce Department is carrying out the requirement to conduct post-shipment verifications on all HPC exports to tier 3 countries, we interviewed Commerce officials to discuss the various methods they use to conduct PSVs and how they assess their results. We also reviewed Commerce guidelines for conducting PSVs on HPCs and reviewed trip reports submitted by Export Enforcement Special Agents conducting PSVs under the Commerce’s safeguards program during 1998. To determine to what extent Commerce had complied with the NDAA requirement that all HPC exports be verified, we (1) reviewed the legal requirements for the PSVs in section 1213 of the fiscal year 1998 National Defense Authorization Act and (2) analyzed data presented in the report mandated by section 1213 of the NDAA, to determine to what extent HPC exports had been verified and the reasons why PSVs had not been performed. In addition, we reviewed the June 1998 memorandum of understanding between Commerce and China’s MOFTEC concerning PSVs conducted in China and discussed its provisions with officials from the General Counsel’s Office of Commerce’s Bureau of Export Administration. We conducted our review between November 1998 and July 1999 in accordance with generally accepted government auditing standards. Agency Comments and We provided copies of this report to the Departments of Commerce, Energy, Defense, and State. Energy did not comment on the report. The Our Evaluation State Department provided oral technical comments, which we incorporated accordingly. The Defense Department reviewed the report and had no comments. Commerce said that the report did not acknowledge that it had to divert enforcement resources from investigations and other preventive enforcement activities to conduct NDAA-mandated post-shipment verifications and that it will soon be impossible to perform such verifications mandated by the NDAA. Commerce believes it will Page 13 GAO/NSIAD-99-208 Export Controls B-283584 become impossible to perform PSVs in the future because computer power is increasing and prices are declining. Commerce, however, could not identify any cases in which PSVs could not be done on non-NDAA cases because available resources were used on NDAA cases. In addition, Commerce officials provided no supporting analysis showing at what point it would be impossible to conduct all mandated verifications. Commerce also had some technical changes that we incorporated into the report as appropriate. Commerce also commented that the licenses required from the NDAA notification process for HPC exports to nine end-users of concern, who previously received HPC exports without a license, represented only 2.61 percent of those exports previously made without a license before the NDAA. We agree that these nine cases represent a small proportion of those HPCs exported without a license before the NDAA, but they illustrate that the NDAA notification process is working and has been successful in identifying suspect end-users. Commerce stated that most uncompleted PSVs were in China and that 103 of 200 outside of China were completed. Table 1 and supporting narrative shows that most uncompleted PSVs were in China. Commerce said that it is futile to seek to visit HPCs exported to China prior to the end-use visit arrangement or without end-user certificates, particularly in view of the proposed changes to control levels for exports to tier 3 military end-users. We agree with Commerce that the proposed changes to the control levels would remove all future licensing requirements for many HPCs that have already been exported to China. Nevertheless, the NDAA currently requires Commerce to conduct PSVs on all licensed and unlicensed HPCs above 2000 MTOPS exported to tier 3 countries, including China, notwithstanding the control levels established by the executive branch. Commerce and Defense Department written comments are reprinted in appendixes IV and V. We are sending copies of this report to the Honorable William M. Daley, Secretary of Commerce; the Honorable Bill Richardson, Secretary of Energy; the Honorable William S. Cohen, Secretary of Defense; and the Honorable Madeleine K. Albright, the Secretary of State. We will also make copies available to other interested parties on request. Page 14 GAO/NSIAD-99-208 Export Controls B-283584 Please contact me or F. James Shafer on (202) 512-4128 if you or your staff have any questions concerning this report. Key contributors to this assignment were Charles T. Bolton and Jason Fong. Harold J. Johnson, Associate Director International Relations and Trade Issues Page 15 GAO/NSIAD-99-208 Export Controls Appendix I NDAA Notifications and License Actions, Appendx ies February 3, 1998 − March 19, 1999 Appendx Ii NDAA notifications NDAA licenses License Countrya Approved required Incompleteb Total Approved Denied RWA Total China 442 59 2 503 9 3 47 59 Russia 91 3 0 94 0 1 2 3 Israel 82 10 3 95 0 0 10 10 UAE 29 0 0 29 0 0 0 0 India 18 21 0 39 6 2 13 21 Egypt 17 1 1 19 0 0 1 1 Saudi Arabia 17 4 1 22 1 0 3 4 Kuwait 16 1 0 17 0 0 1 1 Romania 13 0 0 13 0 0 0 0 Norway 11 0 0 11 0 0 0 0 Qatar 10 0 0 10 0 0 0 0 Ukraine 7 0 0 7 0 0 0 0 Kazakhstan 7 0 0 7 0 0 0 0 Croatia 7 0 0 7 0 0 0 0 Lebanon 6 0 0 6 0 0 0 0 Bahrain 5 0 0 5 0 0 0 0 Lithuania 5 0 0 5 0 0 0 0 Estonia 5 0 0 5 0 0 0 0 Jordan 5 0 0 5 0 0 0 0 Serbia 4 0 0 4 0 0 0 0 Latvia 4 0 0 4 0 0 0 0 Oman 4 0 0 4 0 0 0 0 Australia 3 0 0 3 0 0 0 0 Bulgaria 3 0 0 3 0 0 0 0 Hong Kong 3 1 0 4 0 0 1 1 Belgium 2 0 0 2 0 0 0 0 Cyprus 2 0 0 2 0 0 0 0 Singapore 0 0 2 2 0 0 0 0 Morocco 2 0 0 2 0 0 0 0 Azerbaijan 2 0 0 2 0 0 0 0 Angola 2 0 0 2 0 0 0 0 Belarus 2 0 0 2 0 0 0 0 Algeria 1 0 0 1 0 0 0 0 Page 16 GAO/NSIAD-99-208 Export Controls Appendix I NDAA Notifications and License Actions, February 3, 1998 - March 19, 1999 NDAA notifications NDAA licenses License Countrya Approved required Incompleteb Total Approved Denied RWA Total Yemen 1 0 0 1 0 0 0 0 Germany 0 1 0 1 0 0 1 1 Total 828 101 9 938 16 6 79 101 Legend NDAA=National Defense Authorization Act RWA=Returned Without Action UAE=United Arab Emirates a Several NDAA notifications involved tier 1 and 2 countries because the intermediate consignee for the export was located in a tier 3 country or the HPC was to be used on a ship going into the territorial waters of a tier 3 country. b Returned without action to the exporter because incomplete information was submitted or the export required a license. Source: Commerce’s Bureau of Export Administration Export Control Database. Page 17 GAO/NSIAD-99-208 Export Controls Appendix II Decisions for HPC License Applications Submitted Directly to the Commerce Department, January 1, 1998 − March 19, 1999 Appendx iI Country Approved Denied RWA Total China 12 0 25 37 Russia 12 2 17 31 India 11 5 8 24 Saudi Arabia 7 0 8 15 Oman 2 0 2 4 Romania 0 0 1 1 Switzerland 0 0 1 1 Poland 0 0 1 1 UAE 2 0 11 13 Belarus 0 1 2 3 Syria 2 0 7 9 Bahrain 0 0 1 1 Kazakhstan 2 0 0 2 Australia 2 0 0 2 Bulgaria 1 o 0 1 Pakistan 0 1 0 1 Total 53 9 84 146 Legend RWA=Returned Without Action UAE=United Arab Emirates Source: Commerce’s Bureau of Export Administration Export Control Database Page 18 GAO/NSIAD-99-208 Export Controls Appendix III Reasons Why NDAA Post-Shipment Verifications Were Not Completed Appendx Ii Transaction does not Chinese policy prior to conform to U.S. the end-use arrangement with Request is Check is Number of PSVs arrangement did not China for end-use pending at planned for Country not completed permit such checksa checksb post coming year Otherc China 190 105 82 3 0 0 Israel 40 0 0 16 20 4 Russia 12 0 0 11 0 1 India 9 0 0 0 9 0 UAE 9 0 0 0 7 2 Egypt 9 0 0 0 7 2 Saudi Arabia 6 0 0 0 6 0 Croatia 1 0 0 1 0 0 Kuwait 2 0 0 0 2 0 Ukraine 2 0 0 2 0 0 Algeria 1 0 0 0 1 0 Angola 1 0 0 0 1 0 Azerbaijan 0 0 0 0 0 0 Bahrain 1 0 0 0 1 0 Kazakstan 0 0 0 0 0 0 Lebanon 1 0 0 1 0 0 Oman 1 0 0 0 1 0 Pakistan 1 0 0 1 0 0 Serbia 0 0 0 0 0 0 Total 286 105 82 35 55 7 Legend PSV=Post-shipment Verification HPC=High performance computer a Exports occurred prior to June 1998 arrangement between the United States and China for post-shipment checks. b Exports shipped without a Chinese end-users certificate, which is required for post-shipment verifications. c Includes two HPCs located on ships controlled by companies in countries that do not require a PSV under the NDAA, three HPCs reexported to countries not requiring a PSV under the NDAA, two HPC exports canceled, and a PSV for two HPC exports that has not been completed but is under investigation. Source: Fiscal year 1998 NDAA section 1213 annual report. Page 19 GAO/NSIAD-99-208 Export Controls Appendix IV Comments From the Department of Commerce Appendx i IV Page 20 GAO/NSIAD-99-208 Export Controls Appendix IV Comments From the Department of Commerce Now on p. 3. Now on p. 3. Now on p. 4. Page 21 GAO/NSIAD-99-208 Export Controls Appendix IV Comments From the Department of Commerce Now on p. 8. Page 22 GAO/NSIAD-99-208 Export Controls Appendix V Comments From the Department of Defense Appendx i V (711399) Leter Page 23 GAO/NSIAD-99-208 Export Controls Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary, VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. 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Export Controls: 1998 Legislative Mandate for High Performance Computers
Published by the Government Accountability Office on 1999-09-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)