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Opening Remarks at the 14th International Export Control Conference


Remarks
Vann Van Diepen
Principal Deputy Assistant Secretary, Bureau of International Security and Nonproliferation
Dubai, United Arab Emirates
March 16, 2014

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Introduction

Good Morning, Your Excellency Dr. Gargash, Consul General Waller, ladies and gentlemen. It is pleasure for me to be back in Dubai.

I would like to extend my thanks to the United Arab Emirates for co-hosting the 14th International Export Control Conference with the United States. I’d like to thank the Office of Export Control Cooperation and the EXBS Program for organizing this event. And I’d like to welcome the diverse and interconnected assembly of guests and presenters for what I believe will be a worthwhile event.

Common Threats

We are all here to address the risks to international trade and global security posed by the threat of the proliferation of weapons of mass destruction and advanced conventional weapons. Proliferant states and terrorist groups continue seeking to acquire mankind’s most deadly and destructive weapons. These are common threats; all of our countries are subject to exploitation by proliferators.

Many of us in this room have taken steps to help detect, deter and dismantle aspiring proliferation schemes. For example, in August 2009, the United Arab Emirates (U.A.E.) seized military equipment onboard the ANL Australia. These materials were falsely described on shipping documents as oil boring machine spare parts. The cargo was custom-sealed and loaded on a Democratic People’s Republic of Korea (D.P.R.K.) ship in D.P.R.K. It was trans-shipped several times en route to its declared destination of Bandar Abbas, Iran.

Another example took place in Southeast Asia, which highlights the growing challenges all of us are facing. In December 2009, Thai authorities interdicted an aircraft carrying 35 tons of conventional arms and munitions. This cargo included 240mm rockets, rocket-propelled grenades, man-portable air defense systems (MANPADS), and surface-to-air missiles. The total estimated value was over $18 million. The aircraft took off from the Sunan International Airport in Pyongyang, D.P.R.K. and landed at the Don Mueang Airport in Bangkok to refuel. The airway bill falsely claimed the cargo was 145 crates of “mechanical parts.” To cover their tracks, the proliferators filed a number of flight plans in both directions. This raised suspicions from the Thai authorities and they successfully interdicted the illicit shipment.

Measures and Counter-Measures

These examples reflect diligent efforts by authorities from countries represented at this conference to seize dangerous cargo. These examples also illustrate that proliferators are not giving up. They are adapting their methods, and as a result we must also adapt our approaches to stopping them. So we are in an inherently measure/counter-measure business. As potential source countries adopt international best practices in export controls, and the United Nations adopts various Security Council Resolutions requiring states to control and prevent various proliferation-related transfers, proliferators’ direct access to strategic items is becoming more difficult. But proliferators have compelling ways to get what they want; they figure out how to get around direct controls on technology by accessing intangible goods. They seek out alternative suppliers such as overseas distributors; using circuitous shipping routes.—.including multiple transshipment destinations to obscure the actual destination of the shipment. They often falsify shipping documents and using front companies, cut-outs and brokers to divert sensitive items to unintended end-users or end-uses.

Because proliferators have innovated, we are compelled to respond in kind and tackle the harder aspects of strategic trade controls. Mutual adherence to strategic trade controls is a key component of our shared ability to prevent the proliferation of weapons of mass destruction, because hostile actors need access to goods and materials to build such weapons. Many of your countries have already enacted strategic trade control legislation and license key exports. Together, we must tackle the challenge of critical issues such as catch-all controls, re-export, transit and transshipment, intangible goods, financing and trade activities within free trade zones.

The theme of this conference is Strategic Trade Controls: From Foundations to Practice. So we’ll talk about all the layers of a strategic trade control system, from the legal foundations of your export control laws, to the licensing practices and adherence to control lists, to industry outreach and buy-in for trade controls, to well-trained and well-equipped border guards and customs officials at the borders who can spot irregularities, to the cooperation with other countries, and within your own governments to share crucial targeting information.

I will briefly discuss three challenges in managing trade of strategic goods.

First, the size and velocity of legitimate trade is high and growing. In a global economy, sensitive items are produced by more and more companies around the world. And more small and medium enterprises inexperienced with international trading norms are considering entering the export marketplace. The same is true for distribution channels, which have also grown with the global economy. And containerized shipping has accelerated international trade through lower transportation costs and higher cargo load capacity.

Second, our task also is complicated by the increasing interest of proliferators in dual-use items, not just weapons and items only used in weapons. Especially as proliferators move toward indigenous production of weapons, they seek for use in those production programs items that also have equally legitimate commercial applications.

Many of these dual-use items have weapons applications significant enough to warrant control by the multilateral regimes.—.the Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group, and the Wassenaar Arrangement. In addition, however, proliferators seek items that fall just below the threshold of regime controls – in order to avoid those controls. They also seek items with no counterparts on regime lists -- such as basic chemicals, electronics, and structural materials -- that are key building blocks of weapons production programs, just as they are of any industrial activity.

This challenge of identifying and dealing with those relatively few listed and unlisted dual-use items intended for proliferation programs hiding in a sea of such items for legitimate uses requires catch-all authorities, information-sharing (both domestically and internationally), and industry outreach – all issues that we will be addressing over the next few days.

Third, we all face the challenge of improving our ability to search, seize, investigate and prosecute trade control law violations with minimal impact on the high volume of otherwise legitimate trade. Given that various UN Security Council Resolutions provide us the legal authority to search, seize, and dispose of a wide array of proliferation sensitive good to and from proliferant countries, we need to ask ourselves what types of targeting and enforcement mechanism will help us uncover violations? How can prosecutions help to deter future proliferators? How can states provide incentives to their enforcement personnel to uncover elicit diversions, without fear that those enforcement personnel will unduly hamper legitimate trade? Without proper regulation of transshipment activities, transshipment hubs will continue to be the prime target for this kind of proliferation- related trade. These circumstances compel regulators and enforcement agencies to find technically feasible and economically viable ways to fight back.

Common Obligations

We have to build a network of non-proliferators to counter the threat to national security and global trade from rogue state and non-state actors. This is a challenge that no one nation can solve on its own. We all share a responsibility for global security and economic prosperity; therefore we are all part of this network.

We have common international obligations to help meet these threats. Through the Non-Proliferation Treaty, UN Security Council Resolution 1540, the nonproliferation and terrorism sanction resolutions, the multilateral control regimes, the World Customs Organization (WCO), and the Proliferation Security Initiative (PSI), the international community has adopted a strengthened system to counter these threats.

This is further strengthened by the valuable outreach efforts of these organizations and initiatives. We are celebrating the 10-year anniversary of UNSCR 1540, which obligates all UN Member States to establish domestic controls to prevent the proliferation of WMD and their means of delivery, including controls on exports, transit, transshipment and re-exports of related materials.

The Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group, and the Wassenaar Arrangement contain international suppliers’ standards for implementing nonproliferation export controls. Their control lists are referred to in UNSCR 1540. In many cases the regimes’ control lists are also incorporated into other UN Security Council resolutions, such as those concerning Iran and North Korea. These resolutions create specific obligatory limits on commerce with countries, individuals, and entities that have engaged in proliferation.

UN Security Council Resolutions provide a legal basis for countries to undertake measures within their territories to search, seize, and dispose of a wide array of proliferation sensitive goods moving in or out of proliferant countries. Since the adoption of UNSCR 1540 in 2004, I am pleased to note that many of the countries represented in this room have made progress in meeting their 1540 obligations with respect to developing strategic trade controls.

The Opportunity of This Conference

Over the next three days, we’ll be discussing some challenging aspects of a strategic trade control system – including catch all controls, intangible technology transfers, free trade zones, transshipment, and proliferation finance.

Experts from 60 countries are here to learn from each other, as you’re trying out new ideas in support of our mutual goal of nonproliferation. You’ll hear from many government experts, from United Nations, World Customs Organization and other organizations, as well as from private industry. During the table top exercise, we hope to draw upon the national experiences of developing solutions to these challenges – the proverbial best practices.

As you listen to the presenters, you may hear reference to certain actions as “best practices.” What matters about a best practice is that it works in your context. This could be comprehensive strategic trade reforms, it could be a licensing or targeting practice, or the language in a piece of legislation that you need. What you can put to use in improving your system may be different than what your neighbor needs, but that makes it no less useful. Maybe you have an existing authority that can be leveraged in ways you haven’t thought of.

I’ll make one more point. Others have plowed this ground. There are people in this room who have experiences that you could learn from. And you should share your experiences with others. There is a lot of great work being done out there - too much good work being done to recognize them all, but I’d like to mention a few that recent accomplishments that we’re aware of:

  • The Republic of Georgia, which passed new strategic trade control legislation in December 2013;
  • The Republic of Serbia, which enacted a new dual-use export control law in November 2013, and has submitted a new draft munitions export control law to Parliament;
  • The Republic of Kosovo, which in July 2013 enacted a dramatically revamped strategic trade control law that meets international standards, and is currently establishing a licensing office and its interagency processes;

So we’ve achieved some successes, but we have plenty more work to do. The goal of the conference is to inform, unite, advance a common understanding of our challenges and our opportunities, and to facilitate communications and linkages where none existed. It’s a big community, but everyone counts. The dialogue and partnerships that you’ll create here are invaluable. By focusing our resources and working together to build these networks, we’re more easily able to overcome challenges and apply the practices that will contribute to preventing proliferation and make the world a much safer place for all of us. Thank you!



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