Enduring Challenges of the Strategic Trade Control Regime

Photo of the United Nations Security Council hall (taken by Hu Totya, Wikimedia Commons)

By Evan Thompson, Columnist

Since the first use of nuclear weapons in 1945, there has been a concerted, global effort to prevent their spread. The bookends of this effort were the Nuclear Non-Proliferation Treaty in 1970 and the United Nations Security Council Resolution (UNSCR) 1540 in 2004. UNSCR 1540 requires all UN members to pass laws regulating the trade of WMD components and dual-use goods materials that have legitimate purposes but could be used in WMD production. The Security Council took this step to curb the unfettered access to materials that allowed states like Pakistan and Iran to develop nuclear weapons and advanced nuclear programs.

However, even with a global mandate, numerous challenges plague the international strategic trade control regime: uneven application; limited resources among states to implement it; and, in some cases, a belief that the regime is illegitimate. Where there is interest and resources, there is still a lack of transparency that prevents a true gauge of the regime’s effectiveness. Many states have little interest in making expensive investments in a system that has no perceived benefits for their domestic constituents.

One of the few success stories regarding implementation is the United Arab Emirates. In the last nine years, the UAE has passed new trade control legislation, formed regulatory committees, and implemented border security reforms. In less than a decade, it went from having no trade controls to establishing one of the most robust control regimes in the region. This was not because of concern over proliferation, however, but because the UAE had incentives to make reforms. As a major port of transit, the UAE stood to lose a great deal of business from Western states if it did not implement stricter trade controls. More importantly, the UAE had the bureaucratic and economic capacity to make reforms, separating it from the vast majority of states without trade controls.[i] For those states that do not deal in high-tech trade or are not major transit hubs, the strategic trade control regime is just a sinkhole for already limited resources.

The strategic trade control regime is also severely lacking in transparency and the reporting of successes and failures of its implementation. Even those states that are major proponents of the trade control regime release relatively little information on prosecutions of violators or seizures of suspect goods. Besides the United States, where the Department of Justice regularly releases a list of major export enforcement cases, there are few comprehensive records of such violations.[ii] Many states only provide data on the volume of strategic shipments to those states that are part of their economic unions or of violations within those groups, such as the European Union or Central American Uniform Custom Code.[iii]

Few states provide details of violations publically. A survey of 180 states who submitted reports to the UNSCR 1540 Committee revealed only 10 had provisions for the regular, public reporting of strategic trade violations. This accounts for approximately 9% of states that have trade control laws on record.[iv] Some states, like Estonia, publish an annual report on its strategic trade that contains information on the aggregate number of violations and fines for a given year (“…a total of 43 offences…”).[v] While such reports lack detail, it is a commendable step toward transparency that even most US allies have not taken. There is a need for more transparency in the regime, but states have little incentive to expend limited resources to create it. No state would like to admit that they have a smuggling or proliferation problem, and in this context, governments would be spending large sums of money collating and reporting data that makes them look ineffective or corrupt.

While transparency may seem less important than implementation, it still plays an important role. Without the accurate reporting of violations that take place, there can be no way of knowing the overall health of the regime. This makes the job of agencies and organizations tasked with improving strategic trade controls, such as the US Department of State’s Export Control Cooperation Office, infinitely more complicated by not providing an adequate means of measuring progress or assessing weakness in the regime. It is difficult to establish verifiable best practices if there is no way to gauge progress toward a goal or the effectiveness of recommended measures. In the United States, law enforcement agencies measure effectiveness in part through comparisons of crime statistics in a Uniform Crime Report.[vi] Currently, there is not enough transparency to establish a similar measure of effectiveness in strategic trade control enforcement.

The lack of implementation and transparency are critical problems in the international strategic trade control regime. Slow progress in building the regime generally stems from a mismatch of interests between developed states, which are concerned with stopping the spread of WMD, and developing states, concerned with much more confined and regional issues. Fortunately, the international community can overcome this divide by bridging the gap in interests. The same infrastructure that allows for robust trade controls for dual-use goods and comprehensive record keeping that provides transparency can also help halt the flow of illicit arms and drugs while improving commercial record keeping.[vii]

Building capacity for 1540 does not have to limit economic and trade development. In the next decade of 1540 implementation, the 1540 Committee should emphasize the connection between trade control regimes and development. This would not only further implementation, but also increase transparency and effectiveness where reforms are already underway.

[i] Stinnett, Douglas M. et al.,“Complying by Denying: Explaining Why States Develop Nonproliferation Export Controls.” International Studies Perspective 12 (2011): p. 322-323.

[ii] U.S. Department of Justice. 2014. Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases (January 2008 to the present: updated March 26, 2014). Washington, D.C.: Department of Justice.

[iii] Council Regulation (EC) No 428/2009 of 5 May 2009 Setting up a Community Regime for the Control of Exports, Transfers, Brokering, and Transit of Dual-Use Items. (2009). Official Journal of the European Union. Chapter VIII, Article 25. Central American Uniform Customs Code. 2002. Official Gazette No. 18. Articles 11, 16, 21.

[iv] United Nations 1540 Committee. 2014. “National Implementation: General Information.” http://www.un.org/en/sc/1540/national-implementation/general-information.shtml. (June 8, 2014)

[v] Ministry of Foreign Affairs. Strategic Goods Commission. 2012. Strategic Goods Commission Activity Report 2012. Tallin: Ministry of Foreign Affairs.

[vi] FBI. 2010. “Summary of the Uniform Crime Reporting Program.” (October).

[vii] Brian Finlay, Southern Flows: WMD Nonproliferation in the Developing World, Stimson,

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