Export Controls: Post-Shipment Verification Provides Limited Assurance That Dual-Use Items Are Being Properly Used
Highlights
The United States controls certain dual-use technologies that could be used to enhance the military capabilities of countries of concern. The Department of Commerce (Commerce) conducts post-shipment verification (PSV) checks to ensure that these technologies arrive at their intended destination and are used for the purposes stated in the export license. GAO was asked to (1) assess the number of dual-use export licenses approved and subject to postshipment verification and (2) evaluate how the PSV process ensures that sensitive exports are used as intended.
The Department of Commerce approved 26,340 licenses for the export of dual-use items during fiscal years 2000 to 2002. Twenty-eight percent of these licenses involved dual-use exports to countries of concern such as China, India, and Russia. However, Commerce conducted PVC checks on few of these licenses. We found that, during fiscal years 2000 to 2002, Commerce completed PSV checks on 428, or about 6 percent, of the dual-use licenses it approved for countries of concern. Commerce and other departments attached conditions to nearly all (99 percent) of the licenses for countries of concern to alleviate concerns about potential diversion or misuse. We identified three key weaknesses in the PSV process that reduce the effectiveness of this important activity. First, PSVs do not confirm compliance with license conditions because U.S. officials frequently do not check license conditions, they often lack the technical training to assess compliance, and end users may not be aware of the license conditions by which they are to abide. Second, some countries of concern, most notably China, limit the U.S. government's access to facilities where dual-use items are shipped, making it difficult to conduct a PSV. Third, PSV results have only a limited impact on future licensing decisions. Companies receiving an unfavorable PSV may receive greater scrutiny in future license applications, but they can still receive an export license. In addition, according to Commerce officials, past PSV results play only a minor role in future Enforcement actions.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Commerce | To improve the PSV process, the Secretary of Commerce should improve technical training for enforcement personnel conducting PSV checks to ensure they are able to verify compliance with license conditions. |
Closed – Implemented
In January 2004, we reported (Export Controls: Post-Shipment Verification Provides Limited Assurance That Dual-Use Items Are Being Properly Used) that the Commerce Department conducts post-shipment verification (PSV) checks to ensure that dual-use items arrive at their intended destination and are used for the purposes stated in the export license. To conduct PSV checks, Commerce personnel visit foreign companies to verify the use and location of exported items. PSVs serve as one of the primary means of checking whether end users are complying with conditions imposed by the license. Commerce placed conditions on nearly all approved licenses for exports to countries of concern for fiscal years 2000 to 2002. We identified a number of weaknesses in the PSV process that reduce its effectiveness. Specifically, we found that U.S. officials often lack the technical training needed to assess compliance with license conditions. We recommended that the Secretary of Commerce improve technical training for personnel conducting PSV checks to ensure they are able to verify compliance with license conditions. In response to our recommendation, the Department of Commerce: 1) revised its special agent manual, 2) changed its post-shipment verification checklist, and 3) updated the training of enforcement personnel. In June 2006, we reported in GAO-06-638, p. 40, that the Department had implemented this recommendation.
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| Department of Commerce | To improve the PSV process, the Secretary of Commerce should ensure that personnel conducting PSV checks assess compliance with license conditions. |
Closed – Implemented
In January 2004, we reported (Export Controls: Post-Shipment Verification Provides Limited Assurance That Dual-Use Items Are Being Properly Used) that the Commerce Department conducts post-shipment verification (PSV) checks to ensure that dual-use items arrive at their intended destination and are used for the purposes stated in the export license. To conduct PSV checks, Commerce personnel visit foreign companies to verify the use and location of exported items. PSVs serve as one of the primary means of checking whether end users are complying with conditions imposed by the license. We identified several key weaknesses in the PSV process that reduce its effectiveness, including the concern that PSV checks often did not confirm compliance with license conditions. As a result, we recommended that Commerce ensure that personnel conducting PSV checks assess compliance with license conditions. In response, Commerce 1) changed its safeguard trip report template, which now requires agents to verify license conditions, 2) revised Commerce training manual to require agents to take license conditions with them, and 3) changed procedures to ensure that for a visit to be deemed successful, the agent must be able to check compliance with license conditions. In June 2006, we reported in GAO-06-638, p.40 that Commerce had implemented this recommendation.
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| Department of Commerce | To improve the PSV process, the Secretary of Commerce should require that the exporter inform the end user in writing of the license conditions. |
Closed – Implemented
In January 2004, we reported (Export Controls: Post-Shipment Verification Provides Limited Assurance That Dual-Use Items Are Being Properly Used) that the Commerce Department conducts post-shipment verification (PSV) checks to ensure that dual-use items arrive at their intended destination and are used for the purposes stated in the export license. To conduct PSV checks, Commerce personnel visit foreign companies to verify the use and location of exported items. PSVs serve as one of the primary means of checking whether end users are complying with conditions imposed by the license. We identified several key weaknesses in the PSV process that reduce its effectiveness, including the concern that end users may not be aware of the license conditions by which they are to abide. As a result, we recommended that Commerce require exporters to inform end-users in writing of the export license conditions. In response, Commerce published a new regulation requiring exporters to inform end-users in writing of export license conditions. In June 2006, we reported in GAO-06-638, p.40 that Commerce had implemented this recommendation.
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