Past Needs and Current Demands

In 1776, even as Adam Smith was championing the ideals of a free market economy, he recognized that the interests of national security far outweighed the principles of free trade. More then two centuries later, that sentiment proves to still be accurate and in use. Since the early 1900s, the United States has used this precept to defend its position on trade barriers to hostile nations, and through the majority of the century, that predominantly referred to the Soviet Union and its allies.

Just as Adam Smith supported the Navigation Acts in Great Britain to protect the navy (their chief means of defense; Smith 1776: 464), the United States has gone to great lengths to protect their chief means of defense: the technologically advanced electronics and machinery areas. The motive for these measures has not changed over the centuries. The desire to maintain superiority over other nations and to retain the ability to defend the sovereignty of the nation have remained an important aspect of both foreign and trade policy. It is the trade policy that we are most concerned with in this paper.

It is the desire of the United States to preserve the technological superiority that we have enjoyed for so long. After all, if no other nation equals our level of technology, then it greatly reduces any threat from another nation simply because we can counter anything they may threaten us with. However, if it is not possible to retain such a lead in technology (and it is not, at least not for long), then it becomes necessary to retain the ability to deal with all subsequent security threats in an efficient manner. Smith advocated, and the United States has implemented, the use of export barriers to make sure that crucial goods or intelligence vital to national security does not leave the country or fall into the hands of our enemies.

Though the Cold War is over, and the threat that has loomed over the United States and the rest of the world that depended on the United States for military support for the better part of this century has largely been eradicated, does not mean that there are no longer any security threats to the United States. The United States remains cautious in regards to the unstable status that Russia frequently seems to be in, as well as security threats from other nations like Iraq, and to some degree China. As long as there are still threats to the United States (and there is no foreseeable abatement of these threats), it will be necessary to maintain export controls on strategic goods.

In the following pages I will be looking at how export barriers have been used domestically and internationally (through CoCom), the effect and effectiveness of these barriers, and what the current needs for export barriers are.

Early Export Controls in the United States

In 1917, the Trading with the Enemy Act was passed. This set the precedent for the system of export barriers that dominated much of this century, that are only now being reduced. The President of the United States, under this act, was permitted to forbid any economic activity in wartime with states designated as enemies (Kemme 1991:5). Restrictions on exports formed a large part of the United States war strategy during World War II. Though rudimentary, the Trading With the Enemy Act was effective in asserting that trade was a powerful tool; not only in denying the enemy potentially needed goods, but also in preventing the enemy from getting its hands on strategic goods. It also set the precedent for the use of export controls by the United States against states that it is unfriendly with.

During the 1940s, both China and the Soviet Union were put on the proscribed list as a result of unfriendly relations resulting from their political regimes. The United States strongly supported an economic system based on the principles of liberalism, but there remained the growing competition with the Soviet Union. Though it was recognized that free trade carried many benefits along with it, it also carries national security risks in that the free trade may contribute significantly to the military capabilities of an enemy (Mastanduno 1992:39). As a result, it was realized that to exclude the Soviet Union and its Eastern European allies and China from this concept of world free trade was in the interests of the United States.

In 1949, the notion that had been initially stated in the Trading With the Enemy Act was further codified in the Export Control Act of 1949. The Export Control Act allowed the President the right to employ export controls for national security interests in times of peace. It has been argued that it is the single piece of legislation that gives the most power to the President to control American commerce (Mastanduno 1992:73). The President had the authority to cut off the entire export trade under very vague standards that were left almost entirely up to the President’s discretion. It also exemplified what was referred to as "the economic equivalent of political ‘containment’", curtailing trade with the Soviet Union and China for the reasons described above (Kemme 1991: 5). US allies Great Britain and France soon followed this lead by establishing a similar system in their respective countries. Because of the supporting actions of Great Britain and France, the United States soon realized that multilateral action was necessary to make export barriers to the Soviet Union and its allies effective.

This needed multilateral action took the form of a voluntary Coordinating Committee established in 1949 at the initiative of the United States. Though it began as a voluntary committee, the United States, perceiving that it faced the greatest threat to its security, ensured the participation of its Western European allies. These allies were so indebted to the US after World War II that there was no way they could refuse given the conditions of the US Battle Act of 1951. This act stated that though the members of the Coordinating Committee had no legal obligation to comply, the United States stipulated that no military, economic, or financial aid would be given to any state unless it embargoed trade to any nation that threatened the security of the United States (Kemme 1991: 5). The Western European countries were still so devastated after World War II that they were relying on the United States to have the majority of their needs met. The United States all but paid for the reconstruction of Europe through the Marshall Act, and was exporting tons of food and medicine to the crippled nations. Furthermore, these countries were also almost completely dependent on the United States for military defense as well, their armies having been destroyed during the course of the war.

Most of the Western European nations were not as enthusiastic in export controls as the United States was. These countries felt that economic recovery would be best served by more open trade than what the United States had in mind. But the United States exerted considerable influence and the resulting committee was known as the Coordinating Committee for Multilateral Export Controls, or CoCom. CoCom, largely controlled by the United States at its inception (for who else was in a position to argue with us?), formed the basis of export controls for the following four decades.

CoCom and Domestic Legislation During the Cold War

Even if the Western European nations had not been devastated by the war, the actions of the Soviet Union were enough to convince them that the Soviet Union did indeed pose a threat to their security. The Berlin Wall and the Korean War went a long way in convincing the Western European nations that containment was a necessity. Not only should Soviet power be contained, but if at all possible, be thwarted. The most likely way to accomplish this goal was to deprive the Soviet Union of goods they needed to support and develop their military-industrial complex. This concept of economic isolationism would be supported by the more confrontational political strategy in the United States of the Cold War (Mastanduno 1992:68).

For the Western European nations, CoCom was the perfect forum to resolve the uncertainty of strategic trade controls. CoCom enhanced the incentives for each separate government by creating a shared obligation not to exploit opportunities in trade deemed strategic (Mastanduno 1992: 78). The United States, more fearful of contributing to growing Soviet power, reserved for itself the right to establish stricter controls than the other nations (Mastanduno 1992:79).

The United States had three reasons for wanting stricter controls of strategic goods. The first reason was that United States officials were convinced that the Soviet economy was purely war-driven. They estimated that in 1950 (shortly after the formation of CoCom) 40 percent of Soviet resources were devoted to military purposes. The second reason was the belief that a war with the Soviet Union was inevitable. The third reason was the general vulnerability of the Soviet economy in heavy industry items. In short, the Soviet Union needed heavy industry items, and the United States felt that their best interests would be served in denying the Soviet Union these items to prevent further build-up of the military system (Mastanduno 1992:71-72)

The United States already had in place a series of lists of proscribed items. Germany was required to abide by the U.S. list. Great Britain and France had also forged lists of their own as well. It was from the independent lists of participating states that the CoCom lists were drawn. CoCom created three lists of items that were to be closely monitored so that they did not get into the wrong hands. The first two lists were undeniably strategic items and there was no controversy on their control. These lists were the Munitions List and the Atomic Energy List, and it was universally agreed upon by the participants of CoCom that these items clearly needed to be regulated. The third list sparked more debate. It was the International Industrial List that caused problems within the committee. List three regulated dual-use technology, that is high technology items with potential military applications (Kemme 1991:6). List three contained merely items that had to be watched.

The United States continued to pressure CoCom into accepting the more restrictive U.S. lists. By 1953, they had been largely successful in bringing over about half of the items on the U.S. list to the CoCom lists (Mastanduno 1992:82). The Battle Act mentioned above largely helped convince many of the European nations to go along with the wishes of the United States. Furthermore, the North Korean invasion of South Korea prompted a reassessment of security concerns in Western Europe, helping the United States push for stricter controls (Mastanduno 1992:90). The United States was able to push through multilateral export controls in the early 1950s in lieu of the overt aggression of the Soviet Union. It is clear that economic controls were vital to the national security of not only the United States, but that Western Europe also had security issues that needed to be dealt with.

But 1954 saw Western European recovery, and recovery demanded export outlets. Despite economic concerns, there was also the hope that increased trade would lead to the relaxation of East-West tension. In 1954, CoCom’s lists underwent a reduction from the increase they had seen in the early 1950s. However the United States continued to apply economic barriers unilaterally, but without multilateral support, U.S. controls did not have the desired impact (Mastanduno 1992: 97).

Furthermore, in the late 1950s. U.S. control of CoCom began slipping, largely as a result of the China differential. In 1954 the United States pushed for a continued economic warfare against China, despite the lessened controls on the Soviet Union. The other members of CoCom grudgingly agreed, and the restricted items on the China list that were not on the Soviet list became known as the China differential. Western European nations largely agreed to the China differential to placate the United States after the reduction of items on the Soviet list. But the European states were unhappy over the export controls and began to publicly disclaim them beginning in 1956. By 1957 member nations were declaring that they would no longer abide by the China differential, and at the end of 1957, the differential was abandoned (Mastanduno 1992: 98).

The main reason the differential failed was because the motives were not strategically based. As has been discussed, a commitment to the mechanisms of a free market is desirable, and the United States supports the tenets of liberalism. As Adam Smith pointed out, the only reason to interfere with a free market is in the interests of national security. The motives for the China differential were not based on any security threat that the United States faced. Rather, the motives for the differential were both political and psychological, and thus not justified.

The 1950s indicated the road that CoCom was to follow for the next 30 years. The United States was also greatly influenced by these early years. The United States consolidated its power in the hands of the Executive to control commerce in peace times. The onset of the Cold War instilled a deep national security fear in the United States, and the method of fighting that battle was economic barriers. Bur to make those barriers effective, the United States needed multilateral support. Western Europe did not want to provoke the Soviet Union, but also did not have the wherewithal to limit their trade as substantially as the United States wanted. Western Europe only went along with U.S. strict trade restrictions when facing an overt threat. The U.S. desires to also incorporate political motives into CoCom greatly diminished the U.S. leadership ability in CoCom, and cooperation suffered.

Thus in the 1960s, rather than maintain its policies that its Western European partners found distasteful, the United States could adjust its economic policy to serve political objectives (Mastanduno 1992: 108). The 1960s were characterized by very little debate within CoCom. Members had accepted the need for uniform export controls, and matters largely became routine. Annual reviews of the lists kept them from being overwhelmingly restrictive and to make sure that it reflected the growing technology of the West. The United States helped foster cooperation within the committee by careful enforcement of the lists domestically (Mastanduno 1992:113). Furthermore, when the United States did want to add something to the list, it made sure to establish the strategic value of the item, having learned its lesson from the China preferential. The United States also took it upon themselves to make sure that non-members did not frustrate the efforts of CoCom through bilateral treaties (Mastanduno 1992: 113).

Despite relaxation in CoCom in the late 1950s, the United States continued to maintain a stricter list of banned items than did CoCom, but this time, the United States did not try to foist off there lists on CoCom. Within CoCom, the United States carefully asserted the military peace time potential of any item up for review. This indicated a changing view of imminent and inevitable warfare to a cold war to avoid war. Furthermore, there could no arguments to items that were purely of a strategic nature. All member nations could concede the need to maintain national security interests. Security concerns were once more the focus of U.S. policy in CoCom, rather than political as they had briefly been during the China differential.

Furthermore, U.S. policy was made easier by the clear technological lead that they possessed. In the 1950s, when items on the control list were of general industrial significance, other CoCom members could produce and export many items that the United States considered strategic. By the 1960s, the control list came to focus on dual-use items that incorporated very sophisticated technologies. In most of these items, the United States had a considerable lead in the development and production of such items; thereby being able to regulate the exportation of these items most effectively (Mastanduno 1992:117).

Domestically, the United States was also focusing on research and development of technologically advanced defense items. Because the U.S. government was able to regulate what information was released to the private and when it was to be released, military developments frequently preceded civilian ones (Mastanduno 1992:117).

This technological dominance of the United States, as well as the advanced development of further technologies domestically, encouraged U.S. leadership in CoCom. First of all, with the United States controlling the export of technology, it became easier to control what was available on the world market. Also, since the United States was withholding this information from the private sector, all of these technologies had military applications, allowing them to be multilaterally regulated through CoCom. There could be no arguments if the technology did not yet have any commercial value. Furthermore, since the United States clearly dominated the world technology market, it was an implied threat that if other nations did not go along with what the United States wanted, the U.S. could easily disrupt the flow of technology (Mastanduno 1992:118).

In 1969, the Export Administration Act was passed. This act promoted the expansion of peaceful trade with the Soviet Union and its satellites. Despite vigorous debate that freer trade would merely help supply " a communist government that was shooting at Americans" in Southeast Asia, the proponents of increased trade won the argument (Mastanduno 1992: 140). They won the argument due to a number of actions that signaled the beginning of détente. Without straying too much from the matter at hand, some of the leading indicators of an easing of East-West tension included the signing of the nonproliferation treaty, the beginning of SALT, and the ending of the Vietnam War. At the same time, outcries from the business community were getting through to Congress. Domestic corporations did not want to miss out on the potential of the Eastern European market (Mastanduno 1992:141).

The Export Administration Act (EAA) directed the Secretary of Commerce to review the Control list in the United States, and to trim it down to make it more comparable to the lists observed by its allies. Furthermore, U.S. companies were no longer denied the right to export items that could be found everywhere else in the West (Mastanduno 1992:141). The EAA allowed U.S. companies to compete more effectively with Western Europe for a share of the Eastern European market.

Internationally, the EAA marked the end of economic warfare as a U.S. tool of the Cold War, largely due to the failure of the United States government to use that tool effectively. The 1950s, as was demonstrated above, proved difficult for the United States in defining international policy and getting cooperation for that same policy. The limited success of the 1950s led to an adjustment of U.S. strategy in the 1960s, marked by a willingness to go along with European desires for trade. During the 1960s, U.S. technological lead enabled the United States to control items of strategic importance, and to give a show of concession on most other items. At the onset of the 1970s, the United States was showing a willingness to further expand trade and to do away with its domestically more limiting control lists and to adapt to the accepted control lists of its allies (Mastanduno 1992:141).

It has been noted that with the EAA, there was a transformation in the United States economic policy towards the Soviet Union. This transformation was from economic warfare to linkage. Both the Nixon and the Carter Administration used economic motives to influence Soviet behavior. Because the United States was working on primarily political motives, and not economic ones, at this time U.S. firms were at a disadvantage (Mastanduno 1992:143). Economic barriers as a security concerns are acceptable, and usually work to preserve national security, but as a political tool, they lose their effectiveness, as shall be demonstrated.

Also, CoCom, who had been relying on U.S. leadership during the 1960s, was seriously impacted by this change in U.S. policy. CoCom became less effective and more controversial, notably as a result of the absence of U.S. leadership. The U.S was unable to provide effective leadership due to the narrowing of the technological gap created by U.S. superiority in the 1960s. The United States also suffered from a clear commitment to CoCom during this period. As a CoCom member, the United States remained concerned with maintaining strategic export controls, but at the same time, the United States allowed foreign policy goals to take precedence over strategic concerns ((Mastanduno 1992:144).

The impact of the EAA was fully felt during the early 1970s with liberalization of trade beginning in 1972. But the Nixon administration refused to allow trade to precede political normalization. Economic objectives were of secondary importance to political ones. Trade concessions should be used to modify Soviet behavior, and the United States wanted to modify Soviet behavior in Vietnam and arms control. The Soviets could persuade their North Vietnamese allies to be malleable at the negotiating table with the United States. To gain trade concessions, the Soviets also could sign an arms agreement with the intention of stabilizing the nuclear arena (Mastanduno 1992:146).

Through SALT talks and the ending of the Vietnam War, trade to the Soviet Union began to increase. A trade agreement in 1972 called for the mutual declaration of MFN status (Mastanduno 1992:145). The stabilization of military relationships (through SALT I and the ABM agreement) permitted a more congenial trade relationship, limiting the strategic risks of increased trade. Furthermore, the perception that U.S. firms could outcompete other Western firms could lead to a state of economic dependence of the Soviet Union on the United States, limiting the security threats further.

Unfortunately, opponents of both in Congress jeopardized this progress towards trade normalization and political détente. Strong opposition to granting MFN status to the Soviet Union was prompted by continuing human rights violations in the Soviet Union. Furthermore, Members of Congress sought to tie new rules on emigration form the Soviet Union to the Trade Reform Act of 1974. The Jackson-Vanik Amendment to the Trade Reform Act did just that. In short, the amendment refused MFN status to any nonmarket economy that restricted or taxed emigration by their citizens ((Mastanduno 1992:149).

The Soviets did not respond favorably to the attempt to link trade to emigration, and hinted that such a n occurrence would greatly threaten détente. Unfazed by Soviet threats, Congress passed the Trade Reform Act with the Jackson-Vanik Amendment in 1974. When President Ford signed it in 1975, the Soviets responded with a refusal to abide by it. The Soviets went on to abrogate the entire trade agreements of 1972, on the grounds that the Jackson-Vanik amendment was in clear violation of the agreements (Mastanduno 1992:150). The apparent success of Nixon’s linkage strategy was exposed as a failure.

Domestically, the failure of the 1972 trade agreements was seen as a failure on the part of the Soviets. The war in Vietnam continued to drag on, and the Viet Cong showed no signs of cooperation, the was a resumption of East-West tensions in the Middle East, and Congress began to doubt the real value of the SALT treaty. The economic incentives of détente seemed to be at an end.

Despite the waning economic incentives of détente, the Ford administration made a number of attempts to restore, or at least revive, economic normalization during 1975-1976, including urging Congress to reconsider East-West trade legislation. But Soviet intervention in the civil war in Angola with the support of Cuba effectively ended Congressional consideration of trade normalization (Mastanduno 1992:152).

Unfortunately, this left the administration without any incentive to use to modify Soviet behavior with. Without Congressional approval, the president had nothing to offer the Soviet Union in return for good behavior.

Economic diplomacy was resurrected in 1978 by the Carter administration, who sought to capitalize on the dependence of the Soviet Union on American goods. The strategy was to that of flexibility rather than pure denial. This required a rehaul of the control lists that would permit American companies to get licenses for machinery and technology that the Soviet Union needed. The only condition was that the United States could at any time and immediately freeze and export to the Soviet Union should they misbehave. The difference in the Carter strategy from Nixon’s was that Carter focused on manipulating the dependence as an effective tool while Nixon relied merely on the presumption that such a dependence existed; Carter played off of the reality (Mastanduno 1992:154).

But whereas the Nixon strategy failed due to domestic pressures, the Carter strategy failed due to international stimuli. Many of the Unites States allies did not approve of the intention to use trade to encourage or reward political actions. The process of getting a license to export to the Soviet Union in the United States was a lengthy process, to express their disapproval for the United States methods, many of the Western European countries expedited their exports to the Soviet Union, effectively cutting the United States out of the market. This resulted in the Carter administration not having nearly as powerful a tool as they had hoped. Instead, they found themselves being outmaneuvered by their allies (Mastanduno 1992:156).

It is evident that with this flurry of domestic action and legislation that the United States was far more focused at home than it was on CoCom. The failure to play an effective role in CoCom was largely a result of the U.S.’s changing tactics from the 1960s to the 1970s. To other member nations, the United States behavior seemed inconsistent at best. Furthermore, the domestic legislation that was going on in the United States, had it been implemented in CoCom, would have placed a huge administrative burden on the organization that the were not equipped to handle. Also, many of the member nations did not approve of the United States penchant for mixing politics with trade. The decreasing tension in Europe and the increased trade that resulted from détente also helped to influence the Western European nations that less controls were needed and that strategic items needed to be more carefully defined to allow for greater exports to the Soviet Union and its allies. The advances in technology had rendered many items on the control lists obsolete, or at least no longer needing strict regulation.

By the 1980s, the United States had come to a number of conclusions. Most basically, strategic export controls were needed. After that, these export controls should focus on "design and manufacturing know-how" (Mastanduno 1992:187). The reasoning is simple: if you do not know how to make, or you do not know how to use it once you get it, it isn’t particularly significant. Also, revolutionary innovations should be protected assiduously. Routine incremental advances could be made by anyone. It was the phenomenal leaps of technology that needed to be guarded in the interests of national security. And lastly, to make strategic export controls work, they needed to be enforced multilaterally; and that meant strengthening CoCom (Mastanduno 1992:188).

Furthermore, of alarming importance to the United States was the declining superiority of the U.S. in technology. West European countries, particularly West Germany, and Japan were rapidly closing that gap that the United States had so proudly maintained since the 1950s. The U.S. Department of Defense concluded that to maintain technological superiority, and thus deterrence, they had to take certain steps. First, the United States needed to invest more in technology-intensive military research and development. The United States also needed to coordinate defense strategies with its NATO allies to maximize effectiveness. Since the private sector was making nearly as many developments in the technology market, the United States needed to support commercial advances in technology. Lastly, multilateral controls on the export of military critical exports needed to be strengthened (Mastanduno 1992:200).

The invasion of Afghanistan served to further the resolve of the United States to increase export controls. United States officials were convinced that the increased trade during the 1970s had indirectly helped the Soviet Union build and strengthen their military forces. The Reagan administration viewed the Soviet Union as a profound and immediate threat to the security of the United States. By 1981, the administration had concluded that broad economic denial was the key, especially if the U.S.’s Western allies concurred (Mastanduno 1992:233). The United States began to focus on expanding the control lists and tightening restrictions on items that were already on the lists. The United States also bent its eye on expanding and tightening CoCom’s lists as well.

Reagan also stepped away from the issue of détente, and insisted that a show of U.S. military strength was what was needed. An ambitious program to rebuild the U.S. military forces was undertaken. It was hoped that a strong show of strength, as well as denying exports to the Soviet Union would modify their behavior to conform more to Western standards.

Little did the Reagan administration know how well their strategy would work. Top administration officials argued that the Soviet Union’s economy would be sorely strained by a complete embargo from the United States. These views proved to be accurate as the decline of the Soviet Union panned out over the decade. Slow growth, declining productivity, and labor shortages were all symptoms of the fall of the Soviet Union. The decline of Soviet oil production, as well as the dropping world wide oil prices hit the Soviet economy hard. Furthermore, the price of maintaining an empire would soon prove to be to onerous a burden for the Soviet Union to handle. Satellite states in Eastern Europe were draining the Soviet Unions resources, and third world client states were entirely dependent on the Soviet Union for their economic stability (Mastanduno 1992:236).

The denial of Western imports and the shut off of technology in-flow created serious shortages in the Soviet Union. There were too many claimants on the Soviet Union’s limited resources to support their empire. In light of this, the United States decision to step up the arms race again was a remarkably successful decision. The Soviet Union could no longer afford the outrageous costs of a renewed Cold War; or else it would risk losing satellite states that could no longer be supported economically by the Soviet Union (Mastanduno 1992:237). The arms race would expose the Soviet Union’s economic vulnerability. The United States also hoped that a show of vulnerability would bring about market changes in the Soviet Union. If things were as bad as the intelligence reports made it out to be, the Soviet Union could either change their market system or drop out of the role of superpower. Trade liberalization (as it was hoped that the Soviets would change their market system) would eventually bring about the decentralization of the government (Mastanduno 1992:237).

The U.S.’s Western European allies did not whole-heartedly support complete economic warfare with the Soviet Union. Their economies were much more export based, and the loss of revenue from exports to the Soviet Union would hit their economy hard. Also, Western European nations feared that such open economic warfare would provoke the Soviet Union into military confrontation (Mastanduno 1992:242). The Western European nations did not see the Soviet Union as the menacing threat the Reagan administration perceived it to be.

The Reagan administration raised the issue of export controls at the Ottawa Summit of July 1981. The Western European countries answered with the equivalent of a shrug, offering no concrete answer to the United States about whether or not they would comply with U.S. policy towards the Soviet Union.

In 1982, the United States called a cabinet meeting of the CoCom members to discuss a reconsideration of the export controls on technology. Results again were lukewarm. The Western European states offered to harmonize their export control lists, and to review their control lists during 1982-1984. During that time, they pledged to educe exports to the Soviet Union (Mastanduno 1992:243). CoCom members were loath to bring politics into trade export controls.

The United States had a clearly stated desire to embargo all goods to the Soviet Union. The Western European nations were still towing the line, but only on items of strategic importance. Once again, the politics of the United States diverged from the economic realities faced by European nations. They were unwilling to sacrifice trade on any alter other than national security.

The United States clearly saw the need for multilateral export controls; unilateral controls just did not work. In the early 1980s, the United States once again sough to take control of CoCom. The set a domestic example of strengthening export controls as well as tightening the control process. Internationally, the United States sought to encourage the other CoCom states into adopting similar procedures. The greatest problem that the United States had was that they simply did not consider the economic costs of more stringent export controls. Western European economies could not support such methods. Also, the penchant for entangling foreign policy concerns and goals with economic measures did not appeal to the Western European nations.

This dissention among member nations of CoCom led to 1988 deal that once again had the United States agreeing to reduce the CoCom lists and to liberalize East-West trade, very similar to events in the 1950s. By the end of 1989, changes in the international security system had made obvious the need for structural changes within CoCom (Mastanduno 1992:299). But the United States remained stubborn, contrary to the desires of the Western European nations, who saw the political progress being made by many Eastern European nations as heralding the end of strategic export controls. When in 1990, U.S. intransigence threatened to unravel CoCom completely; the United States announced its intention to facilitate drastic revisions of the CoCom control lists (Mastanduno 1992:333).

First, 30 items were immediately deleted from the CoCom industrial dual-use list. Second, controls were liberalized in the three hot bed areas: telecommunications, computers, and machine tools. Third, the outdated industrial controls were to be thrown out, and started over from scratch. This time, the burden would be to prove that the items should be on the list, as opposed to why they should be taken off the list. Fourth, the former Soviet satellites in Eastern Europe were not to be ostracized any longer; rather they would be incorporated into the CoCom system. As long as these Eastern European states made sure to prevent the technology from leaking to the Soviet Union, they were to be treated as part of the alliance system (Mastanduno 1992:335).

It is plain to see that the United States, by 1991, was willing to agree to trade liberalization with Eastern Europe, and to some degree with the former Soviet Union. But hesitancy still colored U.S. foreign economic policy. Despite the ending of the Cold War, the world was not a safe place. The Persian Gulf War of 1990-1991 reinforced that notion, and supported the argument that there were still threats to the national security of the United States. As a result of that war, the United States turned its eye upon making restrictions on proliferation, which have been of limited success (Witness Pakistan and India joining the nuclear club in the 1990s).

The strategic export controls of the Cold War allow for a few broad conclusions. First, the United States has tended to exaggerate the threat to national security in the past, leading it into direct economic policy conflict with its European allies. Second, the United States has a decided penchant to mix politics and foreign policy goals with trade policy, again, to the chagrin of its European allies. These same allies have acted as a conscience to U.S. foreign economic policy. They have reminded the United States time and time again that export controls to protect national security are necessary, but political motives need to be discarded. In a sense, it is possible to hear the words of Adam Smith echoing down through the centuries, "as defence, however, is much more important then opulence," but free trade is most important of all (Smith 1776:464). As a final conclusion, it should be noted that in all the instances when the United States sought to mix foreign policy with economic policy, it met with very limited, if any, success.

Current Problems and the Continuing Issue of Export Controls

When Peter Leitner wrote in 1995 that " the strategic importance of protecting these advanced technologies form acquisition by potentially hostile nations is a concept that appears to have become politically out of vogue," he was correct (Leitner 1995:60). By the mid 1990s, the United Stated was deregulating and liberalizing trade exports. The Cold War was over, Eastern Europe was, well, approaching some sort of stability, and the recent overwhelming success of the Persian Gulf War reinforced the idea that the United States was the king of the world. But the events of the late 1990s have proven this philosophy to be hopelessly optimistic.

"This history of the twentieth century is replete with instances of major, unanticipated strategic shifts," (Leitner 1995: 54). It is becoming apparent that a new strategic shift has occurred with the appearance of China on the strategic front. While China has been in this arena all through out the Cold War, it enjoyed freer trade then did the Soviet Union for the majority of the Cold War. The China Green Line was established in the late 1980s. It was a U.S. policy that gave the green light to a majority of exports to China, with the exception of red items - or items that were of the highest military significance (Mastanduno 1992:279).

The early to mid- 1990s saw a flurry of machine and technology exports to China that have "substantially jeopardized U.S. security interests," (Leitner 1995: 28). By 1995 this had allowed China to produce "the complex shapes needed for aerospace," (Leitner 1995: 28). The export of machine goods was a highly debated issue in CoCom in the early 1990s. To what degree of accuracy should machine exports be permitted? Since machine technology is the backbone of military forces, trade demands conflict with national security, not only conflict, but also "run counter to U.S. national security goals (Leitner 1995:149). This issue of export controls has obviously not abated despite the ending of the Cold War.

The sale of satellite technology to China in 1995 by two U.S. firms sparked the controversy over export controls again. The U.S. firms reviewed satellite launch failures of the Chinese and were accused of showing the Chinese how to improve mathematical models predicting aerodynamic forces. The Pentagon claimed in 1998 that such information could be used to improve ballistic missile and satellite launches (Kohl 1999: 2).

But this is the key to contemporary arguments on export controls. Satellite technology, once used only by the military to coordinate spying and command and control is now the backbone of an immense commercial industry (Hirsch 1998:2). And yet it still has significant military applications. To keep U.S. firms competitive in the world market, trade is necessary, but when does trade mean sacrificing vital national security issues?

Certain satellite technology is closely monitored by the U.S. munitions control lists, as well as the International Traffic in Arms Regulations, but mathematical models? U.S. foreign relations are iffy at best, and China has been identified by House Space Subcommittee Chairman Dana Rohrabacher (R - California) as "America’s worst potential enemy," (Anselmo 1999:2). It is certainly not within the interests of national security to help the Chinese better aim their ballistic missiles at the United States through exports of technology.

"The idea that national security and commercial interests trade off -that every time you sell a satellite overseas, you make a profit but lose a little bit of your military edge" is an archaic concept that was relevant during the Cold War and is no longer (Hirsch 1998:1). Much of the technology that the United States permits the export of is available already on the world market. If the Chinese do not get the information from the United States, it is readily available in Europe. But the United States responded with a familiar crack down on export controls, a pattern that was easily traced during the Cold War. Congress returned commercial satellite to the U.S. Munitions List in March on 1999, taking a step back from the advances in trade liberalization that had been occurring.

The issue that is back in the limelight is how significant national security concerns are and the relationship they have to trade. Vital strategic military technology and machinery needs to be controlled to maintain the ability of the United States to protect itself. That much is clear. But when it comes to dual-use goods, like satellite technology that is widely used in the commercial field, but has applications for military use, the government needs to look closely at who the items or technology is going to and the potential use of it.

To allies and NATO countries, the United States has little to fear and can and does permit very open trade. To more questionable nations like China, the end use needs to be called into account. First, if the technology is readily available on the world market, there is no reason why the United States should deny itself the opportunity to trade. Second, if the technology is not readily available, and it has clear military use, trade needs to be restricted so that application is monitored and it cannot be used to jeopardize national security. Third, if it is predominantly commercial with limited aspects of military applications, limitations should be in order to prohibit the application to military goals.

Conclusion

The United States has used export controls for the better part of the twentieth century. It has used export controls predominantly in the interests of national security, with moderate success. And as was determined in 1776 by Adam Smith, in the interests of national security, sacrificing the goals of free trade is necessary. But the United Stated has also tried to use trade to influence foreign policy, and that met with only limited success. Many of the U.S.’s Western allies did not agree with that philosophy, and sought to reinforce Adam Smith’s tenet of only in the interest of national security should export controls be employed.

Despite the ending of the Cold War, there are still threats to the national security of the United States. A long as these threats remain, export controls to protect national security will remain a key component of foreign economic policy. It is important to learn from the Cold War though, foreign policy goals should not be applied to economic policy. The recent debate over exporting technology to China reinforces the argument that to protect national security export controls are needed. That is an easy conclusion to reach. The harder part is defining how those controls should be formed and on what basis.

Designing export controls is a much more difficult process than it was at the inception of the Cold War. Technology advances have led so many items having military applications. The satellite that cell phones bounce off of could also be used to coordinate nuclear missile launches. The dividing line between military technologies from civilian ones is constantly dwindling. United States policy should be focused on two aspects: one, promoting U.S. commercial leadership in the field of dual-use technologies, and two, to maintain tough export controls that will minimize the acquisition of these technologies by potential enemies.

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