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The Global Partnership in Strategic Trade Management : An Unfinished Business

Rajiv Nayan

.On January 25, 2011, the Federal Register issued a notice for United States (US) Bureau of Industry and Security of the Department of Commerce. The notice removed nine organizations from the entity list maintained by the Bureau of Industry and Security of the Department of Commerce. These nine organizations are Bharat Dynamics Limited,  all four subordinate organizations of Defence Research Development Organisation (DRDO), namely, Armament Research and Development Establishment, Defence Research and Development Lab, Missile Research and Development Complex, and Solid State Physics Laboratory, and all four Indian Space Research Organisation (ISRO), namely, Liquid Propulsion Systems Center, Solid Propellant Space Booster Plant Sriharikota space Center and Vikram Sarabhai Space Center.

The Federal Register is the US Gazette. The entity list is in the US Export Administration Regulation for dual use goods control since 1997. The objective behind maintaining the list is to make companies aware of some organizations suspected of developing Weapons of Mass Destruction. However, it has always been a contested category. A company may have to take license for supplying an item to an organization placed on the entity list.

President Obama’s India visit does not seem ending discussions in India and the US. The first round of the assessment generally eulogized the visit. Of course, a few of the early submissions either criticized or tried to appear balanced. Most of the writings, however, did not undertake the in-depth analysis of one issue or another.  The current phase is concentrating on this task. Magazines, journals and seminar circuits are the new forums for discussions. Newspapers are publishing only specialized articles.

The announcement on export controls of advanced goods is being publicized as one of the big successes of the Obama visit.  By now, the common knowledge is that the joint statement and the President’s public statements have offered a liberalized American export controls for India and support for India in the four multilateral export controls regimes.

Is the task of integration of India in the multilateral export controls regimes and liberalization of the US export controls system materialized? In reality, it is   an unfinished business. Many may argue that a joint statement is a mere statement of intent, and the real work of implementation is done afterwards. To an extent, it is true. Implementation of the joint statement is smooth when an issue area is less contentious for relevant actors. However, the announcement for India on export controls has to pass several rounds of test.

The Indian media indicates that India wants the leftover over organizations belonging to the Indian Department of Atomic Energy to go from the entity list. A few more organizations, including Indian Rare Earths Ltd and heavy water and its ammonia plants are still on the list. Apparently, both sides are negotiating. Quite interestingly, the joint statement did not specify the organizations which would be removed from the entity list. The joint statement gave the impression that all the Indian organizations would be out of the list. In fact, a fact sheet released by the US government identified the organizations removed from the entity list.

One of the real tasks is to ensure the flow of dual-use technology to India. The US dual-use technology regulation maintains that the removal of an organization from the entity list merely removes a layer of control. It does not ensure the end of the bureaucratic control. The dual use technology regulation has several provisions such as Biological and Chemical Weapons, nonproliferation, missile technology and crime controls factors to be taken into account for granting licenses. These provisions give ample scope for bureaucratic control.

Notwithstanding the claim that only about one percent of the total trade between India and the US requires license, the fact remains that the delay or denial of even a few crucial items may derail a project or projects. Though media performers in India looked elated, yet concerns of people who are engaged in dual-use commerce persist. The US President and his administration may have a challenge to inculcate a different kind of culture in its control bureaucracy. The right kind of atmosphere has been created by the announcement. The task should be to build on that.

Similarly, the membership of the consensus-based multilateral export control regimes would take time. The four multilateral export regimes-the Nuclear Suppliers Group (NSG) that controls nuclear goods, the Missile Technology Control Regime (MTCR) that controls missile related goods, and the Australia Group that controls chemical and biological agents and the Wassenaar Arrangement that controls conventional arms and dual- use technologies—have separate criteria for the membership.

India fulfills all the membership criteria of the MTCR and the Australia Group. It fulfills all the criteria but the NPT adherence and some existing Nuclear Weapons Free Zone treaties for the NSG membership, and all but the NPT adherence criteria for the Wassenaar Arrangement. The joint statement underlines the need to ‘evolve’ the criteria for the passage of Indian entry. It is a different matter that even if a country fulfills all the criteria, politics of the regime may prevent a country from taking the membership. The US and India are aware of the complexity which led them to underscore the point of the staggered membership.

The membership of the Australia Group may come first followed by that of the MTCR. The membership for the NSG may witness an initial resistance. However, the emerging profile of India may ultimately determine its entry into the NSG and later or simultaneously into the Wassenaar Arrangement.

In the current international system, it is impossible to enter into any international organization or amend any international law without the implicit or explicit consent of the US. The US support is vital for gaining access inside. So, the US diplomacy along with Indian may have to work hard to gain entry for India in the multilateral export controls regimes. Side by side, the US Administration may have to keep reminding its implementation and enforcement machinery about the relevance of a relaxed and reformed export controls system for India. The completion of business may provide a great opportunity to both the countries to transact in dual use commerce and participate in the global management of high technology.

Rajiv Nayan

The Institute for Defence Studies and Analyses


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