GAO Finds Gap in U.S. Export Controls

Emma Ensign

Sensitive dual-use and military technology can be easily and legally purchased within the United States and illegally exported without detection, according to a report issued by the Government Accountability Office (GAO) last month.

Using a fictitious front company and false identities, the GAO was able to purchase dual-use technology such as electronic sensors often used in improvised explosive devices, accelerometers used in "smart" bombs, and gyro chips used for guiding missiles and military aircraft. The GAO was also able to export the technology without detection to a country that it identified only as "a known transshipment point for terrorist organizations and foreign governments attempting to acquire sensitive technology," the GAO's Gregory Kutz said in congressional testimony June 4. Kutz, managing director for forensic audits and investigations, was a witness at a hearing of the House Energy and Commerce Subcommittee on Oversight and Investigations, which had requested the GAO probe.

Although items such as the ones the GAO purchased are often subject to export restrictions under the Commerce Control List or the Department of State's U.S. Munitions List, they can be legally obtained from manufacturers and distributors within the United States, often with only a name and a credit card, the report said. According to the report, the items have been and continue to be used against U.S. soldiers in Iraq and Afghanistan. Access to that type of sensitive military technology could give terrorists or foreign governments an advantage in a combat situation against the United States, the report said.

Dual-use technology refers to technology that has both conventional and military or proliferation uses. Machinery such as a triggered spark gap, for example, can be used as a high-voltage switch for medical applications and a detonator for a nuclear weapon, the report said.

The report cited officials from several government agencies as saying there is no practical way to prevent such products from leaving the country after they have been purchased by a domestic buyer. The report noted that although regulations are in place to prevent improper use of dual-use and military technology, these regulations focus on controlling exports rather than on securing domestic sales. Currently, there are no legal requirements for the sellers of dual-use or military technology to conduct background checks on prospective domestic customers.

The GAO report highlights "an enormous loophole in the law," Rep. Bart Stupak (D-Mich.), chairman of the oversight subcommittee, said in a statement at the hearing. "The stakes cannot be higher."

According to the report, seven of the 12 types of sensitive dual-use and military items obtained during the investigation have previously been the focus of criminal indictments and convictions for violations of export control laws. Additionally, a 2008 report by the U.S. Army War College's Strategic Studies Institute revealed attempts by North Korea to procure dual-use technology from foreign sources for use in that country's guided missile program.

Although there are programs in place to educate manufacturers and distributors on common risks associated with the sale of military or dual-use technology, the lack of controls in place to regulate domestic sales limits the effectiveness of such programs, the GAO report said.

The report suggests that restricting domestic sales of dual-use and military items could be key to preventing the illegal export of such technology.

Seeking a Balance

Many U.S. companies balk at the prospect of more export controls, arguing that they are obstacles to success in the global market. At the confirmation hearing of Rep. Ellen Tauscher (D-Calif.), whose nomination to be undersecretary of state for arms control and international security was approved by the Senate June 25, Sen. Benjamin Cardin (D-Md.) expressed such concerns.

Because "a lot of technological growth is international," companies would suffer if they "are prohibited from being engaged internationally," he said. Their viability and their "ability to create new technologies to make us safe" would be "compromised if those companies were to relocate in other countries that don't have the same restrictions [as the United States] because they have modernized their national security assessments" that are the basis for export controls, he said at the June 9 Senate Foreign Relations Committee hearing. He asked Tauscher to "review these programs to make sure that we're not disadvantaging American companies" but also to avoid any action that would be "inconsistent with our national security interests, which obviously comes first."

Tauscher said she planned to review U.S. export control policies. She stressed her commitment to protecting dual-use technology on national security grounds, a stance echoed by the GAO report, which stated that "ensuring the effective protection of technologies critical to U.S. national security" was now considered a "high-risk area." However, like Cardin, she noted the need for a balance between commercial and security interests. U.S. policy, she said, has to find the "sweet spot," at which "we are absolutely protecting the national security items, but at the same time, we're cognizant that there's a war of markets for things that can be taken off the list."

The United States, which currently is the leading producer of advanced military and dual-use technology, has become a primary target for illegal procurement efforts launched by terrorists and foreign governments, the GAO report said.

Speaking at the June 4 hearing, Stupak addressed such concerns, saying he hoped to "discuss ways in which government and business can work together to ensure that our technological advantage is not used to jeopardize the safety of our troops, our allies, and our communities here at home."

The issue of illegal retransfers resurfaced later in the month with the June 11 sentencing of Traian Bujduveanu, a naturalized U.S. citizen, who had been convicted for his role in a conspiracy to export dual-use aircraft parts illegally to Iran. Bujduveanu, the owner of Orion Aviation, was sentenced to 35 months in prison for helping to smuggle parts of F-14 fighter jets, Cobra AH-1 attack helicopters, and CH-53A military helicopters.

The Department of Justice has publicly stated that roughly 43 percent of the more than 145 defendants charged in 2008 for violating export controls of restricted military and dual-use technology were attempting to export munitions and other restricted technology to Iran or China.