10 May, 2015

US and UK Export Licence Data Visualisation Tool

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Since 2004, all countries have been required by UN Security Council resolution 1540 to implement export controls in order to prevent the proliferation of weapons of mass destruction. Many countries had export controls well before this resolution was passed, using these measures to safeguard their own national security interests.


Despite the important role played by export controls in the last half century or more, little has been published on how the controls are actually used in practice. This problem is compounded by the fact that only a few countries publish information on export licence refusals (or on licences issued).


Increased transparency around the use of export controls can be helpful. Transparency can reassure exporters and recipient countries that export controls are used fairly and that they are not used to frustrate legitimate commercial activity. Transparency can also help in understanding and countering illicit trade (with somewhere up to half of all licences being refused based upon the risks of the goods being diverted from the stated end use).


In order to facilitate a greater understanding of how export controls are used, Project Alpha has compiled statistics from the UK (already available via the Export Control Organisation statistics website) and from the US government (obtained through the Freedom of Information Act).


In interpreting this data, it is helpful to note the following:


- The export ofchemical weaponsis prohibited by both the US and the UK, as stipulated by the Chemical Weapons Convention (CWC), which bans the development, production, stockpiling and use of chemical weapons. Certain chemicals and equipment that can be used to manufacture chemical weapons is controlled for export in the UK and US. Exports of such material or equipment may be refused when the export would be in contravention of the requirements of the CWC or when there was an unacceptable risk of diversion to a chemical weapons programme.


-The Missile Technology Control Regime (MTCR) is a multilateral international regime that seeks to limit the proliferation of missiles and missile technology. There are currently 34 countries that are members (Partners) of the MTCR, including the UK and US. Licence applications for MTCR controlled goods could be rejected where they are classed as MTCR Category 1 (i.e. complete missile systems and manufacturing capabilities) or where there is an unacceptable risk that the goods would be used in connection with a ballistic missile programme of concern;.


-The Australia Groupis an informal arrangement of 38 countries plus the European Commission that aims to minimise the risk of chemical and biological weapons (CBW) proliferation by restricting the transfer of items on its 'common control lists’. Exports of such material or equipment may be refused there was an unacceptable risk of diversion to a biological weapons programme.


-The Nuclear Suppliers Group (NSG) is a multilateral group of 49 supplier countries contributing to the non-proliferation of nuclear weapons through implementation of two sets of Guidelines for control of nuclear and nuclear-related exports. Exports may be refused when the goods are destined for a country that is not in good standing with the NPT and IAEA Board of Governors, or where there is an unacceptable risk of diversion to a military nuclear programme.


-The Wassenaar Arrangement is a voluntary export control regime of 41 member states which establishes lists of items for which member countries are to apply export controls. These items are included in the Wassenaar Arrangement’s List of Dual Use Goods and Technologies, containing nine Categories and two Annexes (‘sensitive’ and ‘very sensitive’ items, respectively) and the Munitions List (WAML), containing 22 main entries on items designed for military use. Exports may be refused when it is deemed that they would be used contrary to the objective of Wassenaar or where there was an unacceptable risk of diversion to such an end use.


-Unilateral export controls restrict exports of strategic and defence-related items to certain countries based on unilateral risk assessments by either the US or the UK governments.


-Catch-All controls provide a legal and/or regulatory basis for exporting items that are not listed on any of the controlled lists, but which still require export licences, usually where there is reason to believe such items are intended for a WMD/missile-related end-use or end-user. In the US, this procedure is also known as the enhanced proliferation control initiative (‘EPCI’), which prohibits the export without a license of “any dual-use commodities, software, or technology (other than publicly available information) that would contribute to projects of proliferation concern.” In the UK, End-Use controls fall into 2 categories - Military End-Use Control and Weapons of Mass Destruction (WMD) End-Use Control.


- Information Security controls the export of systems, equipment, electronic assemblies, and integrated circuits, includingencryptions of both contemporaneous communications and stored data.



What does the visualisation show?


The visualisation tool provides a comprehensive overview of export licence denials by either the US or the UK, or both, based on the above mentioned criteria. It also points out which countries are currently restricted under sanctions and restrictions regimes. This feature is marked in [!] on the interactive map and differentiates between arms embargoes, financial, services, and trade and / or travel limitations. The representation is based on data provided by the 1540 Matrices and covers a period of 8 years (2006-2014).





Between 2006 and 2014, a total of 3307 licenses were denied by the United Kingdom and the United States. Of these, a majority (1035) are attributable to the Control Lists of the Wassenaar Arrangement, followed closely by Catch-All controls (1004) and unilateral regimes (895). The fact that the two latter categories make up more than 50% of the aggregated number of license denials points to the fact that country-by-country controls are still the most effective way of restricting proliferation-related trade. This could be explained by the fact that more and more states have been adopting catch-all controls and national restrictions on the transfer of dual-usegoods and technologies in recent years, particularly in light of UNSC Resolution 1540, which urges all states to adopt and enforce appropriate national legal measures to prevent proliferation.  


It is important to note that a sharp increase in the number of export license denials is noticeable in recent years, particularly after 2012. (In 2012, just over 300 license denials were issued. This value doubled in the following two years, with almost 600 license denials recorded in 2014). This steep rise in the number of export license denials correlates with the renewed sanctions measures adopted by the European Union and the United States on cooperation with Iran in foreign trade, which targeted the country’s financial, energy and technology sectors and brought aboutan estimated loss of about $26bn (£16bn) in oil revenue in 2012 from a total of $95bn (£59m) in 2011. Indeed, it seems that the dramatic change of value between 2012 and 2013 is almost entirely attributable to Iran and, most recently, Russia in light of the sanctions imposed by both the U.S. and the United Kingdom after its annexation of Crimea from Ukraine in 2014. A closer country analysis is provided below.




Country Analysis


Three countries that stand out as particularly problematic for the US and UK licensing authorities are Iran, China and India. In order to understand why that is, it is important to consider the historical and legislative factors that have shaped trade relations between these countries in the past decades. (India also features prominently as a destination of repeated export licence denials, although less so in recent years.)


The Islamic Republic of Iran


Since 1979, Iran has been subject to a wide range of restrictive measures encompassing the oil, gas, petrochemical, insurance, reinsurance, banking and shipping sectors. In 2006, the UN Security Council passed Resolution 1696, imposing additional sanctions on Iran after it refused to curb its uranium enrichment programme, which Western countries feared would lead to Tehran developing the capability to produce nuclear weapons. These so-called targeted UN sanctions were augmented by a multitude of other non-UN-mandated sanctions against Iran, including a total EU embargo on Iran’s oil sector and a freeze of assets of Iran’s Central Bank since 2012, as well as an arms ban and an almost complete isolation of its economic sector by the United States since 2011.


Iran has been notoriously apt at circumventing these sanctions, as exemplified by several of Project Alpha’s case studies, leaving licensing countries such as the UK and particularly the U.S. concerned about its intentions regarding exports of sensitive and dual-use products and technologies. As a direct result of this, it follows that Iran should be the country with the most export license denials between 2006 and 2011. A total of 530 licenses were refused during this time – perhaps surprisingly, only 72 of which were applied for in the United States, with the rest of 458 denials originating in the United Kingdom. This may be a result of a general US reluctance to engage with any Iran-related goods, since 2008 a steady decline in the number of export license refusals can be observed (3 license denials in both 2008 and 2009, 13 in 2010 and 22 in 2011), directly attributable to the December 2007 Amendment to the International Traffic in Arms Regulations (ITAR). Conversely, and perhaps directly proportional to its own restrictive measures, the UK refusal of export licenses to Iran has followed a different trajectory, growing steadily between 2006 and 2009 (from 8 license refusals to 86), and then more than doubling in number in the following year (186), only to steeply fall again in 2011. It is noteworthy that a majority of these export license refusals are listed under unilateral and catch-all clauses – speaking perhaps to an existing incongruity between international and national export controls. This is also noticeable in the case of the United States, where a unilateral approach takes the lead, accounting for 44 of its export licenses denials, followed by provisions stipulated in the two Wassenaar Arrangement Lists, which have been on the rise since 2009. Since the expansion of both the UK’s and the U.S.’ sanctions regimes, which ultimately resulted in the country’s isolation from the international financial system, export license denials to Iran have rocketed from 33 in 2012 to 151 in 2013 and 153 in 2014. This may also be attributable to the negotiation of a Joint Plan of Action (JPOA) between Iran and six world powers since November 2013, when Iran agreed to halt progress on its nuclear programme in exchange for a relaxation of sanctions. This process is currently still underway and an agreement is expected to be finalised by a 30 June 2015 deadline.


The People’s Republic of China


China is one of the countries counting the most export license denials, as it is currently still subject to an arms embargo under US regulations and a partial arms embargo as defined by the UK government. As such, it should come as no surprise that a total of 412 export licenses destined for end-use in China were denied by the US and the UK governments combined between 2006 and 2011, or 288 and 124, respectively. At the peak of the timeframe under review – in 2008 – 89 licenses were denied by the competent authorities in both countries. The majority of these (50) were refused under the provisions of the List of Dual Use Goods and Technologies and the Munitions List of the Wassenaar Arrangement. A further 14 licenses, all of which had been applied for in the United States, were denied under the premises of the Australia Group, while another six license denials can be attributed to the terms and conditions of the NSG. Unilateral assessments account for 14 denials, all of which originated in the United States, with the remaining two accounted for by the conditions of the MTCR. This represented a significant increase from 63 and 64 export license denials in the previous years, respectively, and could be attributed to the issuance of a US Final Rule regarding Revisions and Clarification of Export and Reexport Controls for the People’s Republic of China (PRC); New Authorization Validated End-User; Revision of Import Certificate and PRC End-User Statement Requirements as published in the Federal Register on 19 June 2007, which tightened restrictions on exports of technology to China in a move aimed at curtailing Beijing’s military modernisation. Similarly, the relevant statutory UK legislation instrument for the implementation of the partial arms embargo on China, the Export Control Act of 2002, was revised in 2007-2008, resulting in the Export Control Order of 2008 which defines what items are covered under the arms embargo. A sharp decrease in the number of export license denials can be observed for the following year: In 2009, only 57 licenses were refused for China – 39 by the US and 18 by the UK. As in the previous year, the Wassenaar Control Lists accounted for a majority (36) of these denials, followed by Catch-All controls (12), unilateral measures (5), NSG (3) and Australia Group (1) – a trend that may be attributable to the change in legislation calling for a stricter interpretation and implementation of export controls in both the UK and the US jurisdictions.


In the years following 2010, China has remained fairly constant with regard to export license denials (67 in 2010, 72 in 2011, 85 in 2012 and 90 in 2013). However, in the last year a significant decrease in the number of export refusals to China becomes apparent, with only 55 denials registered in 2014 – a record low for the data analysed in this tool.   




Examination of the map reveals a substantial number of refusals to India. However, reviewing India by year reveals also that the numbers of refused licences has declined steadily over the period of study. India was subject to broad sanctions after its nuclear test in the 1990s. The high number and changing pattern is likely a result of the US nuclear deal with India and gradual reengagement with the country by the West following its nuclear test-based estrangement.