The U.S. Could Learn from Germany’s New Export Controls

The Wall Street Journal Europe
April 12, 1995, p. 6

Germany is preparing to do what most governments consider the unthinkable – reveal the names of Third World companies linked to the spread of weapons of mass destruction. If Germany goes through with its plans, it will be the first country to publish a list of dangerous customers to which exports must be controlled. Germany will also move ahead of the United States in an export-control strategy to stop the spread of the bomb.

The German government is taking this step to put teeth into its export laws. Both German and American firms are forbidden to export any product they know will help make a nuclear weapon, chemical weapon or long-range missile. These types of rules are applied by both governments and are known as “catch-all” clauses. (By July all members of the EU will adopt this rule.) But there’s a problem: Most governments don’t tell exporters which Third World buyers are doing the bomb-building.

All major exporting countries keep lists of such buyers, but they are secret. The U.S. Commerce Department won’t release its list for fear of revealing intelligence sources and incurring diplomatic protests from the countries that would be named. Commerce Department officials prefer confidential letters, denials of permission to export, or discrete phone calls to warn that a deal might be dangerous. But only a few exporters get these messages. Most are left to trade in the dark. They must not sell to risky buyers, but they don’t know who those buyers are.

“U.S. exporters have a heck of a time trying to get information out of the Department of Commerce,” says a Washington-based trade lawyer who advises industry on export control. Another business consultant complains, “When you call Commerce to ask about a sale, they ask you how it would look on the front page of The Wall Street Journal. What sort of help is that?”

Officials at the Ministries of Economics and Foreign Affairs in Bonn have drafted a list of “about 50 to 60 companies world-wide” to which all exports will require a license, says a German official. Others say the number of names is undecided. The list won’t include all the companies Germany suspects are involved in nuclear, chemical or missile projects because of the concern over diplomatic protests. It will name only the main entities in select countries and will require approval from both the Economics and Foreign Ministries, officials say.

But this is still more than the U.S. Commerce Department is doing. Last year the department even tried to narrow the U.S. catch-all clause by dropping controls on a list of items useful for making nuclear weapons. Oscilloscopes, electron beam welders, high-speed computers and machine tools – all imported by Saddam Hussein in his quest for the Iraqi bomb – would have been free to go to known bomb-builders had other federal agencies not vetoed the Commerce Department’s decontrol drive. The department was also prepared to let U.S. companies sell such things as uranium processing equipment and the infrastructure items needed to equip a large missile or nuclear-weapons complex – all without having to get a license.

German officials say they hope other countries will follow their lead and publish their own lists of suspect buyers. ”We must make use of global information with regard to the catch-all clause . . . or it could become an empty box,” says a senior Economics Ministry official.

Indeed, export control is most effective when all exporting countries apply the same controls to the same destinations. This helps level the playing field for sensitive trade. It also avoids the risk that a country with weak intelligence will unwittingly approve shipments to bomb factories that a country with more detailed information would prohibit.

After being humiliated by its exports to Iraq and Libya in the 1980s, Germany is trying to clean up its act. The irony is that the pro-export Clinton administration is now going the other way. It is grasping every chance to weaken U.S. export-control laws, mainly in the hope of increasing aerospace jobs in California.

There is really no good excuse for not naming dangerous buyers. Most of the information is public and can be culled from reliable and often official sources. If export-dependent Germany can risk offending potential customers by publishing their names, why can’t the United States?