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On August 19, 1994, in Executive Order No. 12924, I declared a
national emergency under the International Emergency Economic Powers
Act (IEEPA) (50 U.S.C. 1701 et seq.) to deal with the threat to the
national security, foreign policy, and economy of the United States
caused by the lapse of the Export Administration Act of 1979, as
amended (50 U.S.C. App. 2401 et seq.) and the system of controls
maintained under that Act. In that order, I continued in effect, to
the extent permitted by law, the provisions of the Export
Administration Act of 1979, as amended, the Export Administration
Regulations (15 C.F.R. 768 et seq.), and the delegations of authority
set forth in Executive Order No. 12002 of July 7, 1977 (as amended by
Executive Order No. 12755 of March 12, 1991), Executive Order No. 12214
of May 2, 1980, Executive Order No. 12735 of November 16, 1990
(subsequently revoked by Executive Order No. 12938 of November 14,
1994), and Executive Order No. 12851 of June 11, 1993.
I issued Executive Order No. 12924 pursuant to the authority
vested in me as President by the Constitution and laws of the United
States, including, but not limited to, IEEPA. At that time, I also
submitted a report to the Congress pursuant to section 204(b) of IEEPA
(50 U.S.C. 1703(b)). Section 204 of IEEPA requires follow-up reports,
with respect to actions or changes, to be submitted every 6 months.
Additionally, section 401(c) of the National Emergencies Act (NEA) (50
U.S.C. 1601 et seq.) requires that the President, within 90 days after
the end of each 6-month period following a declaration of a national
emergency, report to the Congress on the total expenditures directly
attributable to that declaration. This report, covering the 6-month
period from August 19, 1994, to February 19, 1995, is submitted in
compliance with these requirements.
Since the issuance of Executive Order No. 12924, the Department
of Commerce has continued to administer and enforce the system of export
controls, including antiboycott provisions, contained in the Export
Administration Regulations. In administering these controls, the
Department has acted under a policy of conforming actions under
Executive Order No. 12924 to those required under the Export
Administration Act, insofar as appropriate.
Since my last report to the Congress, there have been several
significant developments in the area of export controls:
Bilateral Cooperation/Technical Assistance
As part of the Administration's continuing effort to encourage other
countries to implement effective export controls to stem the
proliferation of weapons of mass destruction, as well as certain
sensitive technologies, the Department of Commerce and other agencies
conducted a range of discussions with a number of foreign countries,
including governments in the Baltics, Central and Eastern Europe, the
Newly Independent States (NIS) of the former Soviet Union, the Pacific
Rim, and China. Licensing requirements were liberalized for exports to
Argentina, South Korea, and Taiwan, responding in part to their
adoption of improved export control procedures.
Australia Group
The Department of Commerce issued regulations to remove controls on
certain chemical weapon stabilizers that are not controlled by the
Australia Group, a multilateral regime dedicated to stemming the
proliferation of chemical and biological weapons. This change became
effective October 19, 1994. In that same regulatory action, the
Department also published a regulatory revision that reflects an
Australia Group decision to adopt a multi-tiered approach to control of
certain mixtures containing chemical precursors. The new regulations
extend General License G-DEST treatment to certain categories of such
mixtures.
Nuclear Suppliers Group (NSG)
NSG members are examining the present dual-use nuclear control list
to both remove controls no longer warranted and to rewrite control
language to better reflect nuclear proliferation concerns. A major
item for revision involves machine tools, as the current language was
accepted on an interim basis until agreement on more specific language
could be reached.
The Department of Commerce has implemented license denials for
NSG-controlled items as part of the "no-undercut" provision. Under
this provision, denial notifications received from NSG member countries
obligate other member nations not to approve similar transactions until
they have consulted with the notifying party, thus reducing the
possibilities for undercutting such denials.
Missile Technology Control Regime (MTCR)
Effective September 30, 1994, the Department of Commerce revised the
control language for MTCR items on the Commerce Control List, based on
the results of the last MTCR plenary. The revisions reflect advances
in technology and clarifications agreed to multilaterally.
On October 4, 1994, negotiations to resolve the 1993 sanctions
imposed on China for MTCR violations involving missile-related trade
with Pakistan were successfully concluded. The United States lifted
the Category II sanctions effective November 1, in exchange for a
Chinese commitment not to export ground-to-ground Category I missiles
to any destination.
At the October 1994 Stockholm plenary, the MTCR made public the fact
of its "no-undercut" policy on license denials. Under this
multilateral arrangement, denial notifications received from MTCR
members are honored by other members for similar export license
applications. Such a coordinated approach enhances U.S. missile
nonproliferation goals and precludes other member nations from
approving similar transactions without prior consultation.
Modifications in Controls on Embargoed Destinations
Effective August 30, 1994, the Department of Commerce restricted the
types of commodities eligible for shipment to Cuba under the provisions
of General License GIFT. Only food, medicine, clothing, and other
human needs items are eligible for this general license.
The embargo against Haiti was lifted on October 16, 1994. That
embargo had been under the jurisdiction of the Department of the
Treasury. Export license authority reverted to the Department of
Commerce upon the termination of the embargo.
Regulatory Reform
In February 1994, the Department of Commerce issued a Federal
Register notice that invited public comment on ways to improve the
Export Administration Regulations. The project's objective is "to make
the rules and procedures for the control of exports simpler and easier
to understand and apply." This project is not intended to be a vehicle
to implement substantive change in the policies or procedures of export
administration, but rather to make those policies and procedures
simpler and clearer to the exporting community. Reformulating and
simplifying the Export Administration Regulations is an important
priority, and significant progress has been made over the last 6 months
in working toward completion of this comprehensive undertaking.
Export Enforcement
Over the last 6 months, the Department of Commerce continued its
vigorous enforcement of the Export Administration Act and the Export
Administration Regulations through educa- tional outreach, license
application screening, spot checks, investigations, and enforcement
actions. In the last 6 months, these efforts resulted in civil
penalties, denials of export privileges, criminal fines, and
imprisonment. Total fines amounted to over $12,289,000 in export
control and antiboycott compliance cases, including criminal fines of
nearly $9,500,000 while 11 parties were denied export privileges.
Teledyne Fined $12.9 Million and a Teledyne Division Denied Export
Privileges for Export Control Violations: On January 26 and January
27, Teledyne Industries, Inc. of Los Angeles, agreed to a settlement of
criminal and administrative charges arising from illegal export
activity in the mid-1980's by its Teledyne Wah Chang division, located
in Albany, Oregon. The settlement levied criminal fines and civil
penalties on the firm totaling $12.9 million and imposed a denial of
export privileges on Teledyne Wah Chang.
The settlement is the result of a 4-year investigation by the
Office of Export Enforcement and the U.S. Customs Service. United
States Attorneys offices in Miami and Washington, D.C., coordinated the
investigation. The investigation determined that during the mid-1980's,
Teledyne illegally exported nearly 270 tons of zirconium that was used
to manufacture cluster bombs for Iraq.
As part of the settlement, the Department restricted the export
privileges of Teledyne's Wah Chang division; the division will have all
export privileges denied for 3 months, with the remaining portion of the
3-year denial period suspended.
Storm Kheem Pleads Guilty to Nonproliferation and Sanctions
Violations: On January 27, Storm Kheem pled guilty in Brooklyn, New
York, to charges that he violated export control regulations barring
U.S. persons from contributing to Iraq's missile program. Kheem
arranged for the shipment of foreign-source ammonium perchlorate, a
highly explosive chemical used in manufacturing rocket fuel, from the
People's Republic of China to Iraq via Amman, Jordan, without obtaining
the required validated license from the Department of Commerce for
arranging the shipment. Kheem's case represents the first conviction
of a person for violating section 778.9 of the Export Administration
Regulations, which restricts proliferation-related activities of "U.S.
persons." Kheem also pled guilty to charges of violating the Iraqi
Sanctions Regulations.
5. The expenses incurred by the Federal Government in the 6-month
period from August 19, 1994, to February 19, 1995, that are directly
attributable to the exercise of authorities con- ferred by the
declaration of a national emergency with respect to export controls were
largely centered in the Department of Commerce, Bureau of Export
Administration. Expenditures by the Department of Commerce are
anticipated to be $19,681,000 most of which represents program operating
costs, wage and salary costs for Federal personnel and overhead
expenses.