Export controls

Export controls (수출통제/輸出統制) refers to one of the government-induced restrictions on international trade for the purpose of:
 * Protection of domestic industries in terms of national security;
 * Control of trading of strategic items;
 * Prevention of proliferation of weapons of mass destruction (WMD 대량살상무기/大量殺傷武器).

Initially export controls of strategic goods had been debated by two camps - stubborn economic containment approach v. relatively flexible strategic approach toward political rapprochement. However, Toshiba-Kongsberg case and September 11 terror attacks, changed the trend into legitimate and effective export controls in the name of national security. Now Export controls are carried out in various fields.

Recently as Iran and North Korea reveal their intention to deveop nuclear weapons, and nuclear-related trade continues to expand, despite economic decline and the Fukushima meltdown of March 2011, nuclear-related export controls have been put on the top priority of the global agenda. Against these backdrops, the Nuclear Security Summit has been held periodically to discuss these issues.

Key words
export control, strategic goods, weapon of mass destruction, UNSC Resolution, national security

Nuclear-related Export Controls
As a result of the economic and proliferation developments worldwide, there has been notable attention on and movement in nuclear-related export controls at the international level, in both government and industry spheres.

The United Nations Security Council (UNSC) Committee established pursuant to Resolution 1540 (2004) – which calls upon all UN Member States to adopt ‘appropriate, effective export controls’ on nuclear and other sensitive items – and the Nuclear Suppliers Group (NSG) have been among the primary drivers of the recent trends and emerging standards in nuclear-related export controls.

The nuclear security summits and the nuclear industry events and initiatives organized around or in response to them, also serve as influential forces in this area. UNSC Resolution 1540 itself is one of the primary drivers of trends in nuclear-related export controls. The Resolution mandates domestic legislation and enforcement of controls on nuclear-related reexports, transits and transhipments, brokering and trade services, and end-users of nuclear-related items. The NSG not only endorses many of the same nuclear-related export control standards as UNSC Resolution 1540, it also promotes additional standards as well. The NSG’s organizational guidelines and ‘best practice’ guides call for participating states to implement end-use or ‘catchall’ controls (licensing requirements or restrictions that are triggered when the transferor knows or should know that the item to be transferred may be used in connection with a ‘nuclear explosive activity’) and controls on intangible transfers (such as electronic or oral transmission) of nuclear-related technology.

In addition, at its plenary meeting in June 2011, the NSG incorporated eight new requirements for exports of enrichment and reprocessing facilities, equipment, and technology, together with four additional requirements for enrichment facilities, equipment, and technology into its Guidelines for the Export of Nuclear Material, Equipment, and Technology. The additional standards elaborate substantially on the singular requirements that were in place for transfers of enrichment and processing items prior to the June 2011 NSG plenary meeting. They are intended ‘to contribute to economic development while avoiding contributing in any way to proliferation of nuclear weapons or other nuclear explosive devices or the diversion to acts of nuclear terrorism.’ Finally, global nuclear-related industries are helping to advance the nuclear export standards espoused by UNSC Resolution 1540 and the NSG through individual and collective efforts. Over the course of 2011, a consortium of nuclear plant exporters developed, adopted, and circulated a Principles of Conduct that includes explicit reference to ‘the requirements of the NSG and UNSC resolutions’.

Asia-Pacific Situation
In the Asia Pacific region, domestic regulation on, and enforcement of, nuclear-related export controls have been enhanced up to the global standards. These standards include extending licence requirements and other controls to transits and transhipments of nuclear-related items, specified end uses and end-users (i.e. "catch-all" controls), brokering transactions in nuclear-related items and trade services, licensing the intangible transfer of nuclear-related technology, and updating national control lists.

In the last few years, many, but not all, countries and areas in the Asia Pacific have incorporated these types of controls into their own domestic systems. Regional institutions and initiatives have played some role in helping to advance these standards among Asia Pacific systems. In the area of transit and transhipment controls, China extended its export control rules and requirements to transits and transhipments of nuclear and nuclear dual-use items in regulatory changes that occurred in 2006 and 2007, respectively. Meanwhile, Singapore excludes all nuclear, and several categories of nuclear dual-use, items from the transhipment exemption that is otherwise afforded to less sensitive strategic items in many cases.

In terms of catch-all controls, Japan and others have established special mechanisms for regulating transfers of nuclear-related items. One mechanism is a licence requirement for those exporting from Japan if they know that the item to be exported will be used for one of six nuclear-related activities:
 * development of nuclear fuel or nuclear source material; research on nuclear fusion (except for research on astronomy and a nuclear fusion reactor);
 * development of nuclear reactors (except for a light-water reactor for power generation) or parts and attachments therefor;
 * manufacture of heavy water; processing of nuclear fuel; and,
 * reprocessing of nuclear fuel.

The second mechanism involves a ‘commodity watch-list’ (the majority of which are items with potential nuclear applications) and an ‘end-user list’ (many of which are potential nuclearrelated end-users). A licence is required for the export of any commodity watch-list item designated as having a nuclear application to any entity included in the end-user list for nuclear non-proliferation reasons.

Taiwan also adopted a special ‘sensitive commodities list’ comprised largely of nuclear-related items (which are not necessarily covered by the NSG control lists) that require a licence in order to be transferred to Iran or North Korea. In 2008, New Zealand instituted catch all-based export licence requirements for transactions involving un-listed items when the exporter is aware, should be aware, or is informed by the government that the item(s) may be intended for the development, deployment, or production of nuclear weapons or other types of weapons of mass destruction (WMD).

In the same legislation that implemented the ‘catch-all’ control, New Zealand also introduced controls on ‘electronic transmissions’ of nuclear-related technology. Singapore instituted its controls on intangible transfers of technology associated with all the items (including nuclear) on its strategic goods list in 2007, while India legislated controls on transfers of software and technology associated with its Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) List (of which Categories 0 and 4 cover nuclear-related items) and/or nuclearrelated end-uses in 2005, and then again in 2010.

In the area of brokering and trade services controls, Malaysia incorporated a registration require ment for those brokering transactions involving nuclear and others items subject to its Strategic Trade Act (2010), and a permit requirement for those brokering transactions involving strategic items when they know, should know, or are informed by the government that the item is intended or likely to be used in nuclear or other weapons of mass destruction.

Australia is another Asia Pacific system with an end-use-based brokering/trade services control on nuclear-related items: Australian law prohibits the provision of services where the service provider ‘believes or suspects, on reasonable grounds, that the services will or may assist a [nuclear or other] WMD program’.

Last but not least, in the past year, governments in the Asia Pacific region have sought to bring their control lists current with the lists established by the NSG and other multilateral export control regimes. For example, in July 2011, Pakistan updated its ‘Control Lists of Goods, Technologies, Material and Equipment and Their Delivery Systems’ to incorporate changes that had been made to NSG control lists since 2005. Hong Kong SAR took similar action in November 2011, when it incorporated NSG and other regime control-list changes that have occurred since 2009.

Although all of these developments in the Asia Pacific seem to point to the gradual emergence of regional nuclear-related export control standards, it is important to note that not every domestic system includes each and every type of the afore-mentioned controls or implements those controls in precisely the same manner. For example, while several countries and areas in the region have control lists based on the EU Dual-Use Goods List’s structure and coding system (including Hong Kong SAR, Malaysia, Singapore, Taiwan, and Korea) others such as China, India, and Japan employ their own unique control list coding approaches.

In the area of intangible technology transfers, China, Hong Kong SAR, and Taiwan controls are not as well-defined as those of countries like New Zealand or Singapore. Other Asia Pacific countries and areas base their transit and transhipment licence requirements on end use or end-user determination as opposed to listed items, and many countries in the region do not yet license brokering and services related to trade in controlled items. The differences and ‘gaps’ in nuclear-related export controls in the region notwithstanding, the ‘vector’ is in the direction of more Asia Pacific countries and areas incorporating such controls in their domestic regulatory systems, and the gradual expansion and standardization of those controls in the countries that do.

In sum, the trends and standards in nuclear-related export controls that have been established at the international level increasingly are visible at the regional and domestic levels in the Asia Pacific. Asia Pacific economies have been implementing controls on transits and transhipments of nuclear items, nuclear weaponrelated end uses and end-users, intangible transfers of nuclear-related technology, and brokering and providing services for nuclear-related trade transactions. With established regional initiatives and the momentum generated by the Seoul summit, these trends are likely to continue in the region. Assuming they do, firms conducting business in and with nuclear energy and nuclear dual-use industry sectors in the Asia Pacific will need to track them and consider developing both local and regional approaches to nuclear-related export control compliance.

Korea's case
Korea, the host of the 2012 Nuclear Security Summit, is the consummate example of the convergence of the many dynamic issues surrounding nuclear trade and development. Korea is working to make nuclear energy one of its leading industries, it is situated (literally) in the middle of recent nuclear safety and proliferation flash-points, and it is emerging as a global leader in the world of nuclearrelated export controls.

Korea’s export control system has developed considerably in the last two decades to become one of the more advanced in the Asia Pacific and the world. The Foreign Trade Act serves as the primary legal basis for Korea’s contemporary export control system, and the ROK Ministry of Knowledge Economy (MKE) is the lead licensing agency for most export controlled items, including nuclear dual-use items. Korea’s export control system reflects almost all of the international trends and standards described above. In addition to controls on exports of nuclear-related items, the Korean system includes licence requirements for transits and transhipments, restricted end uses and end-users, intangible transfers of technology, brokering activities for all items covered by the multilateral export control regimes, including the NSG.

For example, a licence is required for transit or transhipment of an item when the transferor knows or is informed that the item is likely to be diverted to a WMD end use. In addition to standard end-use-based export licence requirements, Korea has instituted country-based ‘catch-all’ controls that apply to at least ten nuclearrelated items that are not on the ROK’s national control list (similar to Japan’s ‘Commodity Watch-List’ and Taiwan’s ‘Sensitive Commodities List’). Some of the items on that list include isostatic presses, flow/spin forming machines, and certain aluminum and aluminum alloys.

Until recently, export controls on nuclear materials and equipment in Korea were governed by the Atomic Energy Act and licensed by the Ministry of Education, Science, and Technology (MEST). In July 2011, the Atomic Energy Act was renamed the Atomic Energy Promotion Act, and a new Nuclear Safety Act was ‘separated-out’ of the previous Atomic Energy Act, together with a set of implementing Presidential decrees. In addition, a new agency directly under the Office of the President, the Nuclear Safety and Security Commission (NSSC), was created to oversee a wide range of areas related to nuclear energy and industry, including nuclear security, safety, and licensing trade in nuclear material and equipment. As a result of these new laws and decrees, the nuclear export control licensing authority changed from the Nuclear Control Team at MEST, to the Atomic Energy Control Division at NSSC.

Specifically, the NSSC is responsible for licensing trade of nuclear materials, equipment, and reactors (i.e. the equivalent of NSG ‘Trigger List’ items). Responsibility for Korea’s nuclear and radiologicalbased ‘catch-all’ controls also has shifted to the jurisdiction of the NSSC pursuant to the legal changes that occurred in 2011.

Meanwhile, the Korean Institute of Nuclear Nonproliferation and Control (KINAC) has been designated to assist with the classification and licence review of nuclear items, while MKE has retained trade licensing authority for all nuclear dual-use items. As some in Korea have observed, in making these changes the Korean government has moved to a holistic approach to nuclear safety, security, and export control, and it will be interesting to see how that approach works to balance Korea’s economic and nonproliferation objectives. If it does so successfully, it may be a model that other countries with active nuclear industries and related trade, especially in the Asia Pacific, adopt in the future.