I am submitting herewith the report on this subject requested in the
memorandum of the Chairman of the Under Secretaries Committee dated May
22, 1972.2
In conducting the work of the Task Force, I have found that there is
general agreement on the need for an effective strategic embargo and on
the continued value of COCOM as an
essential part of such a program. No one has suggested either the
withdrawal of U.S. support for COCOM
or, at the other extreme, any sharp increase in the scope of the COCOM embargo program. All have agreed
that there have been problems in maintaining the cooperation of the
COCOM members in a relatively
tight COCOM system. There has been
general agreement on a number of steps, both within the U.S. Government
and in COCOM itself, that would be
helpful in making the system function somewhat more smoothly.
Despite this considerable area of agreement, however, our discussions
have reflected differences in evaluating the weight or priority that
should be accorded to the U.S. effort in COCOM in relation to other elements
[Page 960]
in our national policies, both foreign and
domestic. Other U.S. objectives in our political or economic programs,
or compulsions that may flow from important international developments,
may and indeed do compete with the objective of maintaining a strong
COCOM system. When this happens,
compromises may be necessary.
It is clear from our discussions in the Task Force that the way different
agencies would determine the kind of adjustment that should be made
grows out of their evaluation of the relevant assumptions in the light
of their primary responsibilities.
One of the options reflects this aspect of our discussions, in suggesting
a higher priority effort in COCOM
based on evaluations of its high importance and low cost in terms of
impact on competing programs. This option, espoused by Defense and
supported by Defense comments at various points in the study, asserted a
greater need for new basic guidelines, a more pessimistic view of the
future of strategic controls without a major U.S. effort, and a higher
appreciation of the past accomplishments of COCOM than the other members seem prepared to support.
Since the agency views have been so fully developed in connection with
the drafting of the report, I hope it will be possible to obtain agency
positions without holding a meeting.
Attachment4
Washington, November 17,
1972.
STUDY OF COCOM
(NSDM-159)
I. Summary
Description of COCOM System
In 1950, the U.S. and its principal Allies established a strategic
trade control system the function of which was to restrict the flow
to the Communist world of equipment and technology which could make
a significant contribution to the military strength of those
countries. This system remains today in its essential operating
features much as originally established. Its administration is in
the hands of a permanent Coordinating Committee (COCOM) which sits in Paris and whose
15-
[Page 961]
nation membership
consists of all of the NATO nations (less Iceland) plus Japan. U.S.
participation is authorized by the Mutual Defense Assistance Control
Act of 1951 (the Battle Act), and U.S. positions and actions in
COCOM are formulated and taken
by the Department of State in coordination with the Departments of
Defense and Commerce and the Atomic Energy Commission, as well as
other departments and agencies concerned with security controls over
exports.
The basis of COCOM actions is a
list of commodities (and technology related thereto) the export of
which is embargoed. By agreement among the participating countries,
no member country will license exports of these items to Communist
countries without COCOM approval.
A unique aspect of COCOM is that
all decisions require unanimous agreement of the members, whether
they are determinations of what will be included in the
International List or approvals of requests by the participating
countries for exceptions to permit them to license specific
transactions of embargoed items.
How the System Has Worked
Despite many spotty areas and variations in thoroughness of
application, the COCOM system has
in our view worked reasonably well in accomplishing its limited
purpose of controlling the flow of a selective list of strategic
goods and related technology to the Communist countries.
Approximately every three years this list is reviewed and revised in
negotiations carried out over a period of months, the latest such
review having just been completed. This updating process has
resulted in a considerable narrowing of the embargo coverage over
the past decade or so, but new items have also been added to protect
new technological developments.
Generally speaking, the U.S. has been in favor of maintaining more
extensive controls than our COCOM
partners, who are constantly seeking reductions in the embargo
coverage. This basic difference in policy approach has led
periodically to fairly serious strains within the Organization. Our
partners have made a few spectacular departures from the rule of
unanimous decision in response to heavy commercial pressures. The
most serious of these was unilateral denunciation of the
differential China list in 1957 by the UK. There have also been
several important exports of embargoed commodities and technology
without COCOM approval,
particularly in the aircraft and computer fields. However, such
instances have been surprisingly few.
Defense points out that the COCOM
system was established at a time when our partners, still trying to
rebuild their economies in the aftermath of World War II, had little
of strategic value to export. Now their situation is different and
while all COCOM members render lip
service to the principles of the embargo and even occasionally
propose
[Page 962]
additions to it,
their major emphasis is on its reduction and on obtaining
exceptional treatment for the sale of their manufactures and
technology. They have proved themselves quite willing to class as
strategic and place under embargo a commodity which only the U.S.
can export, but when they develop a capability to produce the same
commodity (often as a result of U.S.-furnished technology) they tend
to argue that it is no longer strategic, confident that the burden
of any increased Free World defense expenditures which may have to
be made as a result will be borne by the United States.
Some inroads into the system have been made by illegal diversions to
Communist countries of shipments of strategic commodities. While
such diversionary activity can never be stopped completely, efforts
to minimize it have varied greatly in intent and effectiveness from
country to country and at different times. While it is of course
difficult to assess the effects of this type of activity, such
information as is available indicates that the controls have not
been seriously undercut in most instances.
A further limitation on the effectiveness of the embargo is the
availability to a limited, though increasing, degree of strategic
commodities from five Western “neutral” non-COCOM countries. The three most
important—Austria, Sweden and Switzerland—have cooperated with
COCOM in varying degree.
Impact of the COCOM Embargo
As demonstrated in the body of the report, the USSR’s technology
applicable to nuclear weapons delivery systems lags significantly
behind the West—from two to six years for such items as liquid and
solid propulsion systems, guidance systems, penetration aids, test
equipment, communications equipment, transistors, integrated
circuits, and advanced computers. The study cited in the report
shows that the lag is even greater for the PRC, ranging from eight to twelve years. It is a
reasonable assumption, and Defense believes it is demonstrably the
case, that the COCOM controls are
playing a significant role in preventing this gap from closing.
The resulting gain to the U.S., in military terms, is a margin of
technological advantage on which the success of our deterrent
strategy heavily depends and on whose maintenance in FY 1973 we will expend more than $8
billion for defense research and development alone. The Department
of Defense considers that, in economic terms, the gain to the U.S.
is the saving of several billion dollars for additional defense
research, development, procurement and deployment which would become
necessary if our present margin of technological advantage were to
be lost or seriously impaired.
[Page 963]
At the same time, in terms of effect on total trade, only a small
percentage of potential exports are affected by the embargo, and its
complete elimination could be expected to produce only a minor
increase in the present $12 billion level of Free World exports to
the Communist areas.
Present Situation and Problems
The COCOM organization remains
voluntary and informal, depend-ent upon the cooperation and
cumulative effectiveness of the national control systems of the
member nations. The principle of unanimous decision continues in
effect. A major review of the lists has just been successfully
concluded, and the day-to-day handling of exceptions requests
continues relatively smoothly.
However, the COCOM system as it
presently exists is faced with some increasingly serious problems.
First, as a result of the prevailing spirit of détente, the new
emphasis on East-West trade, and heightened commercial interest, our
COCOM partners put increased
pressure on the U.S. during the recent list review to agree to
substantial relaxation in the embargo. For example, at one stage the
UK made it clear that it was unenthusiastic about continuing its
COCOM cooperation if the U.S.
could not be more forthcoming in reducing controls on items the UK
regarded as crucial.5 Our partners have also
pressed for U.S. approval as exceptions to the embargo of exports of
highly advanced technology. Departures from the principle of
unanimity have been averted in several instances only by U.S.
acquiescence in such proposals after high level political
representation and review. We do not agree with our partners’
apparent assessment that the strategic risk has sufficiently
lessened to permit the degree of liberalization they desire.
However, it is evident that our increasingly divergent views are
creating a serious political problem which threatens the continued
effectiveness of the organization.
In the view of the Department of Defense, in agreeing to relaxation
of controls in the last list review and in approving a number of
major exceptions cases, the U.S. has made substantial concessions to
allied pressures. There is every sign that these pressures will
continue unabated, particularly in the very areas, such as
electronics, which can continue to benefit from strong controls, and
the U.S. is thus faced with the choice of stiffening its stand from
here on out, or having the COCOM
system become little more than a facade.
[Page 964]
Second, the volume of requests for exceptions to the embargo has
increased to such a degree that further measures must be found to
permit concentration, both in COCOM and within the U.S. Government, on cases of major
concern and to screen minor cases out of the international review
process. In the ten years from 1961 to 1971, the value of exceptions
to the embargo rose from $3.4 million to over $75 million annually,
and the number of exceptions cases processed through the Committee
from 142 to 635 per year. The results of the recent list review will
eliminate many exceptions requests, but requests in 1972 are running
at almost double the 1971 rate.
Third, by 1972 it was apparent that the U.S. role in COCOM had undergone a gradual but
distinct change. The U.S. still served very much as the conscience
of COCOM, proposing more new
embargo listings that the others, opposing the combined judgment of
our partners on certain key items, and objecting to more exceptions
cases than any other COCOM member.
At the same time, the U.S. itself began to take a more aggressive
interest in seeking exceptions. It moved into first place in number
of submissions in 1971, and pressed hard for urgent action on some
of its own cases. The handling of the RCA earth station and Boeing
aircraft cases for the PRC
dramatized for the other COCOM
members this unusual U.S. interest in rapid almost after-the-fact
COCOM approvals. The new U.S.
policies on trade with the PRC and
vigorous trade initiatives toward the USSR suggested to other COCOM members that the U.S. attitude
toward COCOM was becoming more
relaxed. Although we have repeatedly assured them that this is not
the case, it seems unlikely that they are fully persuaded. Our
pressing of exceptions which appear to diverge dramatically from our
previous policy, and which in some cases are inconsistent with
positions recently taken in the Committee on others’ exception
proposals, has furthermore led to the view, now seriously held in
some quarters, that the U.S. is attempting to take commercial
advantage of its dominant COCOM
role. The corrective steps recommended under Options B and C appear
needed to prevent this new divergence of attitudes from fatally
weakening the COCOM structure.
In the judgment of the Department of Defense, many of our current
difficulties in COCOM could be
dealt with more effectively were it not for deep-seated differences
of viewpoint toward COCOM, its
role, its effectiveness, its cost, and its worth among the principal
U.S. departments and agencies involved in the Washington
decision-making machinery. These differences have resulted in an
increasing inability of the interdepartmental machinery,
particularly at the working group level, to reach decisions both on
exceptions cases and on list review questions as is manifested by
the growing number of COCOM
matters which in recent months have had to be escalated to the White
House for
[Page 965]
Presidential
level decisions. If these differences, most of which remain unstated
could be brought into the open, authoritatively examined and
resolved once and for all, many difficulties in the system would
either disappear or be reduced to manageable proportions.
Future U.S. Policy Toward COCOM
As part of the extended analysis of COCOM in the basic paper, a range of options for the
United States is examined. These options are summarized with
pros-and-cons in the section immediately following, entitled Options
and Recommendations.6
Most of the agencies participating in this study believe that it
would clearly be unrealistic under prevailing conditions to expect
success in any effort to broaden or strengthen COCOM. On the other hand, the
agencies agree that the problems being experienced in the
organization are not yet of sufficient gravity to warrant reliance
on alternative mechanisms for controlling strategic trade nor to
attempt to obtain basic modification of the COCOM structure. Several measures for
improving operation of the system and preventing its deterioration,
including procedures within the U.S. Government, have been
identified. The question of undertaking preparations to make the
COCOM List coverage as
selective as possible is also examined in the report.
The options considered in this study have been grouped into five
basic approaches, as described below.
Option A: Maintaining an Effective COCOM System
Under this heading are listed a number of specific actions which
might be undertaken as a positive U.S. program to prevent
deterioration of the COCOM
system.
In recommending this Option, the Department of Defense believes that,
while strategic trade controls have been reasonably effective to
date, their future prospects are not promising unless the U.S. acts
to give them greater support. The Departments of State and Commerce
do not support the Option as presented. They believe that approaches
to other member governments at an appropriately high level along the
lines of Sub-Options (1) and (4) could be useful and appropriate if
tied in with implementation of Sub-Option C (4) and completion of
the U.S. review there referred to, dependent on the outcome of the
review, but consider that a recommendation along these lines can
usefully be made only after completion of the U.S. review. They also
believe that such an approach made now, and unrelated to the outcome
of the U.S. review, would be both undesirable and ineffective.
[Page 966]
A fuller statement of advantages and disadvantages of this Option is
found on pages7
Option B: Improved Support of COCOM Operations
Under this heading we have grouped several actions which might be
undertaken, without major overhaul of the existing system, to
improve Washington support arrangements—by speeding up decisions on
COCOM cases, insuring adequate
and timely technical contributions, and minimizing paper work.
With the exception of B (4) on which Defense dissents, these
recommendations are supported by all agencies, although Defense
believes that none of them go to the heart of the problem.
Option C: Modifying the COCOM Organization
Under this option, we have considered modifications of the COCOM system itself including the
adoption of majority voting, national determination in exporting
end-items, a liberalized de minimis rule, and further refinement of
the embargo list.
For reasons set out in the Options section and in the report, all
agencies agree that it would be unwise to modify the present
unanimity rule in COCOM or to
curtail the COCOM structure to the
extent of abandoning the system of international review of
individual exceptions to the embargo. The Departments of State and
Commerce believe that, although the de minimis level was raised from
$200 to $500 earlier this year, it could without significant
strategic risk be further raised to $1,000 (and from $4,000 to
$5,000 for servicing of previously exported equipment). The
Department of Defense disagrees.
The Departments of State and Commerce are of the opinion that
limiting the list to the minimum essential coverage necessary to
meet the basic COCOM objectives
should permit a further refinement of the list in 1974. Such a
refinement will aid in preserving the existing effectiveness of
COCOM in the face of the
present spirit of détente and the mounting pressure for
relaxation.
The Department of Defense can accept this recommendation only to the
extent that “further refinement of the list” is not a euphemism for
a sharp reduction; first on security grounds, because with the list
review just ended, a sharp reduction has been made and second, on
practical grounds, because, as the mounting pressure for further
relaxation shows, our COCOM
partners are not appeased by such U.S. action. Moreover, the
Department of Defense believes this fresh review should
[Page 967]
be undertaken only in
connection with the other measures outlined in Option A. In fact,
Item 6 in Option A provides for essentially this kind of review.
Option D: Reliance Upon Unilateral Controls and
Bilateral Understandings in Place of COCOM
A shift away from the COCOM to a
unilateral approach is examined but the conclusion is reached that
the U.S. no longer has sufficient technological leadership to make
such an alternative viable. Additional factors are the commercial
discrimination that would affect American firms and other Western
firms subjected to unilateral U.S. controls, and the serious
political problems which would result from attempting to enforce
these controls extraterritorially. While Defense agrees that the
COCOM mechanism continues to
be the preferred approach, it would not entirely rule out this
alternative when it judged that COCOM controls were no longer sufficiently
effective.
Option E: Reconstitution of COCOM as an East-West Trade
Coordinating Group
The possibility of expanding COCOM’s role and giving it a more positive aspect has been
studied. All agencies which have expressed positions on this option
consider that it would be inadvisable under present circumstances to
seek to broaden COCOM into a trade
development or coordination group. While other existing
organizations might prove to be more suited to this purpose, the
possibility should be retained of utilizing COCOM in such a role upon completion
of the Conference on European Security and Cooperation.
[Omitted here is the body of the paper.]
