U.S. export-control liberalization: The reality

Controlling technology flows


The U.S. has only committed to incremental easing of its export-control regime depending on Indian concessions


Brahma Chellaney

Mint, November 16, 2010


The nuclear deal was sold to the Indian public as a means to liberate the country from U.S.-imposed technology controls. In fact, once all the steps in the tortuous process of nuclear dealmaking were complete, Prime Minister Manmohan Singh triumphantly announced on September 6, 2008, that, “It marks the end of … the technology-denial regime.” Yet Dr. Singh came full circle by unilaterally declaring during his joint news conference with visiting President Barack Obama that, “We welcome the decision by the U.S. to lift controls on export of high-technology items and technologies to India.”


Obama, while silent on this issue during the news conference, earlier told business executives in Mumbai that he would make “fundamental reforms” to the U.S. export controls that constrict trade between the two countries. There is, however, a large gap between reforming and lifting export controls. So, did Dr. Singh jump the gun again? The answer, unfortunately, is yes.


The Americans have committed themselves only to a step-by-step easing commensurate with further Indian actions and concessions. The caveats and other riders introduced by the U.S. side — as on the issue of backing India’s candidacy for a UN Security Council permanent seat — have been lost in the euphoria over the Obama-visit announcements.


Hours after the joint news conference, Obama clarified the U.S. position in his address to the Indian Parliament. His key words — “we’ll work to reform our controls on exports” — merely echoed the 2005 assurance in the nuclear deal. In the joint statement released at the end of his visit, the U.S. also said it “intends to support India’s full membership” in four multilateral technology-control cartels “in a phased manner.”


The key point is that the U.S. has offered no commitment, let alone a timetable, to lift technology controls. It has only “committed to a strengthened and expanded dialogue on export-control issues through fora such as the U.S.-India High Technology Cooperation Group (HTCG).” Constituted in 2003, HTCG has sought to loosen U.S. export controls in four specific areas — information technology, including trade in advanced electronics and software, high-performance computers and encryption; biotechnology; nanotechnology, especially its commercial applications in public health, energy and water treatment; and defence and strategic trade.


The Obama administration actually has initiated a broader export-control review with the aim of spurring U.S. economic growth through stepped-up technology exports to all emerging economies, not just to India. The archaic technology-control system is widely considered a serious hindrance to such exports. Washington is particularly keen to use export-control liberalization to help increase U.S. share of the Chinese market and thereby reduce the yawning, $262-billion trade deficit with Beijing. The potential Indian market for U.S. high-tech exports is not only smaller than China’s, but the U.S.-erected barriers also have been higher because of India’s NPT-outlier status.


Given the range and extent of export controls currently in place against India in both civilian and military spheres, a significant lowering of such national and multilateral barriers — not their full dismantlement — can be New Delhi’s best hope. In that context, the Obama-visit announcements represent modest progress toward such lowering of controls.


India’s admission to the four cartels — Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group and Wassenaar Arrangement — is expected to be a lengthy process, dependent on building consensus and the “evolution” of new “membership criteria.” More importantly, these cartels are aimed at controlling technologies, not at sharing technologies. Membership in any cartel will not automatically qualify "outlier" India to the free flow of technologies. India is already a “unilateral adherent” of the NSG and the MTCR, as part of the nuclear deal-related conditions imposed by America’s Hyde Act. In fact, President George W. Bush formally certified to Congress in 2008 that India had become NSG- and MTCR-compliant.


The other announcement during the Obama visit related to the removal of some more Indian enterprises from the U.S. blacklist, the “Entity List.” Inclusion of an entity on that list subjects it to a virtual U.S. export embargo. But removal of an entity does not consequentially make it eligible to import U.S. high technology freely because of the India-specific export licensing requirements that are in place.


The Obama-visit announcements hopefully will accelerate the process of lowering of technology-trade barriers that began with the Next Steps in Strategic Partnership (NSSP). The growth in controlled dual-use trade, even if fairly small, attests to the ongoing export-control liberalization. A lot more liberalization, however, has to happen before India’s technology access begins to match that of America’s close allies.


The Obama visit actually signalled that the U.S. will continue with its incremental approach to export-control liberalization, calibrating its actions to Indian concessions extending beyond non-proliferation. America’s primary interest is to boost its technology exports while simultaneously gaining a foothold in India’s strategic sectors. At the same time, a major U.S. objective still is to curtail nuclear and missile proliferation in South Asia — a goal that runs counter to a more-open flow of technology to India. Thus far, India has kept its nuclear and missile capabilities at the substrategic level. The launch of an ICBM programme, for example, will surely bring it under renewed technology-control pressures.


(c) Mint, 2010.

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