Input from Dr Ian Stewart - final

U.S-EU Trade and Technology Council (TTC) Export Control Working Group: Input from Dr Ian Stewart, Executive Director of the James Martin Center for Nonproliferation Studies

Note: This submission was made in parallel to the EU and US consultation seeking comment on the U.S-EU Trade and Technology Council (TTC) Export Control Working Group.

I would like to start out by expressing my strong support for the work of the US-EU Trade and Technology Council (TTC) Export Control Working Group. It is an established fact that the US and the members of the European Union are among the leading producers and traders of strategic goods. Furthermore, the US and EU are global leaders in export control and nonproliferation. In this context, it is overdue for there to be close cooperation and coordination between the US and EU on export control issues. While there will inevitably be areas in which structures, systems, and processes of the US and EU result in differing actions, from my vantage point as an export control professional who has resided in both the EU and the US, it is clear to me that it is in the interest of both the US and EU to coordinate, and where possible, cooperate in relation to export controls.

Based on my experiences with export control in the US, EU, and around the world, I have sought to identify what I consider to be priority areas for the US-EU Trade and Technology Council (TTC) Export Control Working Group to consider. My experience includes acting as an export licensing assessor within a European member state (the UK), an expert acting on behalf of the EU’s outreach and capacity building program (the EU program on dual-use goods), an implementer for the US export control and related border security program, and an academic focused on the topic of strategic technology proliferation and export controls. My goal in this response is to set out an ambitious but practical agenda for the group that seems to maximize the scope of cooperation between the US and EU on export control issues.

1. China: There is no more pressing issue for strategic trade controls than the question of how best to manage the risks of great power competition in general and the emergence of a geo-strategically and technologically assertive China. While the China challenge is evidently a politically sensitive one that is often best discussed through surrogate issues, such as the control of emerging technology, the working group must also find ways to have frank exchanges on the China challenge and how best to address it. As an extension of this point, the US and EU should discuss issues including implementation of military end use controls, implementation of export controls and related measures in universities and research institutes, and cybersecurity of export-controlled information, wherever it resides.[1]
2. Scope of controls: The US and most (but not all) EU member states are parties to the main export control regimes which provide the principal mechanism for updating control lists. While it is right that export control regimes be the primary and initial forum through which to agree multilateral controls, the reality is that the regimes are not well placed to be the main forum for all types of export control cooperation and coordination. In particular, export control regimes are not well positioned to manage the trade and technology challenge associated with an increasingly belligerent Russia and the China challenges mentioned above. There may also be other specific security challenges where consensus cannot be reached within the export control regimes. In this context, it is important that the US and the EU, along with other likeminded allies, be prepared to develop alternative approaches to control that address security challenges that cannot be addressed through the export control regimes. This could include a need to agree on supplemental technology control lists and rules, guidance and other materials necessary to address the security challenge.
3. Licensing criteria: The EU regulation on dual-use goods details the licensing criteria for dual-use goods, including recent updates to account for human security considerations. The US similarly publishes its licensing policy through the federal register. It would be advantageous for the working group to review and compare the factors, approaches, and interpretation of these factors with the purpose of ensuring consistency in approaches. Such exercises can benefit from the examination of hypothetical and real licensing cases.
4. General licensing and licensing exceptions: The US and EU take different approaches to the question of how to lessen control on lower risk shipments to lower risk destinations. At a high level, the EU uses general licensing whereas the US uses a counter chart. While these are differing approaches, there is a good deal of overlap in terms of the concepts behind these approaches. The EU and US should thus discuss this topic with the aim of building common understandings of where there is scope to move more trade to more permissive licensing approaches. Similarly, the EU and US should discuss the existing approaches with a view of identifying instances in which the licensing approaches of one or both parties are too lax, particularly in the context of emerging world events which can often result in a need to quickly update controls.
5. Enforcement: It is important for the US and EU to increase cooperation in relation to enforcement. There are many elements of enforcement, and it is recognized that in the EU enforcement is largely a national competence. Certain elements of enforcement, such as live case investigation are also carefully guarded so as not to risk prejudice of the investigation. Nonetheless, as happens in the export control regimes, there is great value in likeminded states sharing insight related to enforcement matters. This can include sharing trends and tactics of proliferation networks. It should also include shared insight into proliferation activity that occurs between the US and EU such as when networks ship goods from the US to the EU before shipping the goods on to third countries and vice versa. Such is the importance of the enforcement issue, and the need to build on common experiences of enforcement good practice and experience, that a dedicated sub working group on enforcement should be created.
6. End users and end use of concern: The US and EU presently take different approaches to managing trade with entities of concern. The US publishes a number of entity lists, including the Entity List and the Unverified Entity List. Both the US and the EU also publish formal sanctions lists, although these are generally somewhat removed from the export control issue. Beyond these published lists, the US and EU states also share information on export control denials, for example, through the joint export control regimes to which most (but not all) states are members. It would be advantageous to develop new mechanisms to share information on end users and end uses of concern between the US and EU member states. This could include sharing non-public information on entities of concern.
7. Pre-licensing checks and end use verification: The EU and the US presently take different approaches to pre-licensing and end use verification. The US implements pre-licensing and end use verification programs in multiple countries whereas as the EU and its member states by and large do not conduct such checks. While the EU and its member states should continue to consider the merits of end use verification initiatives, the EU and US should at the least consider information sharing on what checks are conducted where information may be useful in relation to future licensing decisions. For example, should the US conduct a negative end use verification visit, sharing this information with the EU could prevent EU member states authorizing the export of goods to this entity without appropriate consideration.   
8. Capacity building with third states: The US through a variety of programs including the Department of State Export Control and Related Border Security Program and the Department of Energy INCEP program and the EU through the EU P2P program on dual-use goods are the global leaders in the provision of export control capacity building on a global basis. While there are strong overlaps in terms of the pillars, objectives and partner countries of these programs, the programs have differing funding mechanisms, funding restrictions, and available resources. As a result, coordination between these programs can result in clear benefits. As an example, and without prejudice to the present difficulties that result from cooperation with the People’s Republic of China (PRC), the EU has historically been able to undertake export control capacity building with the PRC whereas the EXBS program has been unable to do so because of congressional funding restrictions.  However, the scope for synergies goes substantially beyond this. Ultimately, progress on export control implementation globally will require technical cooperation and capacity building and the development of political will through encouragement and inducement. The US and the EU should develop a common view of the status of export control implementation in every country in the world and develop a strategy which looks to leverage every tool of the US and the EU and its member states to promote the effective implementation of export controls. While there will be a need to prioritize resources, including through the lens of the national priorities of the US, EU, and EU member states, such an approach will result in tangible global improvements in export control implementation. Furthermore, closer cooperation including through the approach detailed above can allow the resources of the US, EU, and its member states to be more fully leveraged in support of needs-based capacity building.
9. Responsiveness of controls: Both the US and EU have made strides in the recent past in updating their respective legal basis for export controls. The new EU regulation and the Export Control Reform Act are solid foundations on which to build. However, I also feel that it is true in both cases that these respective legal measures came too late. While this could be dismissed a consequence of the involvement of Parliament in the EU and the role of Congress in the US, it will be important to develop an ability in both the EU and US to update the legal basis of controls much more rapidly in furtherance to emerging challenges and threats. This will require the development of relationships with the respective legislative bodies. However, it would also benefit from a strong civil society and academic voice capable of advocating for action and coordination between the EU and US such that there is perceived pressure for neither to ‘fall behind’ in the updating of controls
10. Non-governmental voices: Both in the US and in the EU non-governmental voices make essential contributions to the effective implementation of export controls. This includes industrial voices which are heard through various forums in the EU and the US, academic voices, and advocacy voices. It would be advantageous to develop additional forums through which such voices can contribute to the work of the working group. The working group’s first outreach session for industry is a good starting point for this. This should be built upon in the future, perhaps to the extent that it may be beneficial to create joint US/Industry advisory panels to provide input to the working group. Furthermore, a dedicated event should be held to engage non-industry voices (i.e. academics and researchers working on export control and nonproliferation issues).
11. Cooperation with the UK: While I recognize the political and diplomatic challenge with the following suggestion, I believe it essential that the US-EU Trade and Technology Council (TTC) Export Control Working Group find a way to cooperate with the United Kingdom. As a former EU member state, the UK’s controls remain closely aligned to those of the EU even though they are now based on a different legal basis. The UK is a close trading partner with both the US and the EU and can be considered a likeminded state in relation to export controls and nonproliferation. As the mandate of the working group includes engagement of third country states, I believe it is within the groups purview to include the UK as a third country partner along with other third party states. In this context, the UK should be invited to participate in working group outreach events for third country states. Where possible, the UK should also be engaged in relation to the above-mentioned suggestions.

I would like to end as I started in expressing my support and appreciation for the TTC working group on export controls. I am supportive of the working group’s efforts and will look forward to opportunities to support the working group’s important contributions.

[1] Cybersecurity of export-controlled information should include the setting of cybersecurity standards that will be met even when export controlled information is not exported – i.e. when it resides on the domestic network and computer hardware of technology holders.