Wassenaar Failure

The Coordinating Committee on Export Controls, known as "CoCom," was a creature of the Cold War.

The Coordinating Committee on Export Controls, known as "CoCom," was a creature of the Cold War. It was created in 1949 to coordinate the embargo of militarily useful technology that had been organized by the United States and its allies against the Soviet Union. CoCom dissolved after the collapse of the Soviet Union and was replaced in 1996 by the Wassenaar Arrangement, named after the Dutch city in which it was organized.

While one can argue that CoCom played a successful part in the West's Cold War victory, it is hard to see how the Wassenaar Arrangement has any useful purpose with regard to export controls in the post-Cold War world. In fact, an objective observer could conclude that the Wassenaar Arrangement is actually undermining U.S. national security and our industrial base. The reason being that the arrangement focuses U.S.-export controls on China in the mistaken belief that our European allies support our effort to deny China certain products and technologies.

Unfortunately, as any machine tool builder in America will explain, the embargo of five-axis and other high-technology machine tools to China is mostly unilateral. Our European competitors have taken advantage of this one-sided approach to make inroads into what has evolved into the largest machine tool market in the world — with as much as twice the machine tool consumption of the U.S. this year.

The Defense Department tells U.S. machine tool vendors that they can't sell an identical five-axis machine to a Chinese customer that bought one the previous year. They fear that the additional machine tool might provide the Chinese with extra production capacity that could be diverted to military projects. European export-control authorities, however, have no such qualms about approving as many machines as Chinese customers want.

In the mid to late 1990s, while our government was denying nearly 50 percent of the machine tool license applications for Chinese end users, the success rate of European applications approached 100 percent. The Chinese obtained all the advanced machine tools that they needed for their growing economy, while the U.S. machine tool builders developed a reputation as unreliable suppliers.

The U.S. State Department was reluctant to complain to European governments about their licensing policies, because, unlike the veto system of CoCom, the Wassenaar Arrangement operated under the principle of "national discretion." That means that each member has a right to interpret the rule as they see fit.

Compounding the problem, China is not listed as a target of the Wassenaar Arrangement, so, it is entirely a matter of "national discretion" as to whether a member views China as a strategic threat. A review of Defense Department position papers clearly reveals that the U.S. Government treats China as a potential threat. But there is a disagreement among our European allies as to whether China should be treated as a potential threat for licensing purposes. That difference of opinion lies at the heart of the recent debate within the European Union over ending the Tiananmen Square sanctions.

What does all this mean regarding the cooperation that the U.S. can expect from the European Union if we enact new "military catch-all" regulations for cutting off exports to potential Chinese military end users? It would be foolish to expect the EU to enact regulations with the same scope and rigor.

Furthermore, in a period in which we have little leverage over our allies, paired with a recent history of scant cooperation and significant differences regarding the severity — or even the existence — of a strategic threat, any assumption of a united front is simply not founded in reality.

Nonetheless, expect to see new Chinese military catch-all regulations issued shortly, because the U.S. Government wants to set a good example for our Wassenaar allies. Does anyone actually believe this will impress our allies enough to follow our lead?

You can help revitalize U.S. manufacturing! Send this page to your Congressman, local and state government leaders, or your local newspaper editor. Add your own comments on the importance of manufacturing innovation to the health of our economy. Your comments are also welcome at pfreedenberg@ AMTonline.org
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