SENIOR INTERDEPARTMENTAL GROUP ON INTERNATIONAL ECONOMIC POLICY (SIG-IEP)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86M00886R000400030058-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 21, 2016
• Document Release Date: January 12, 2009
• Sequence Number: 58
• Publication Date: January 18, 1984
• Content Type: MEMO

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Approved For Release 2009/01/12 : CIA-RDP86M00886R000400030058-5
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RMON
Approved For Release 2009/01/12 : CIA-RDP86M00886R000400030058-5
 THE SECRETARY OF THE TREASURY
WASHINGTON 20220
MEMORANDUM FOR
fxcct: vc Rcgis:ry I
?d' / J
THE
VICE PRESIDENT
THE
SECRETARY
OF
STATE
THE
SECRETARY
OF
DEFENSE
THE
SECRETARY
OF
AGRICULTURE
THE
SECRETARY
OF
COMMERCE
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
DIRECTOR OF CENTRAL INTELLIGENCE
UNITED STATES TRADE REPRESENTATIVE
ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
ASSISTANT TO THE PRESIDENT & DEPUTY TO THE CHIEF
OF STAFF
ASSISTANT TO THE PRESIDENT FOR CABINET AFFAIRS
CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS
ASSISTANT TO THE PRESIDENT FOR POLICY DEVELOPMENT
SUBJECT Senior Interdepartmental Group on
International Economic Policy (SIG-IEP)
A meeting of the SIG-IEP is scheduled to be held on
Thursday, January 19, at 3:00 p.m., in the Roosevelt Room.
The agenda is as follows:
1. Expo Ad inistrat gn tact (/f(iic fit ~~-
Outst ndi Commer /DODDiffe;ences
2. International Debt Update.
An options paper on agenda item 1(b) is attached. The
paper was prepared by an interagency staff group chaired by
OMB and circulated for policy-level clearance. Agenda item
2 will be an oral report.
Don 1AT.'Regan
 Approved For Release 2009/01/12 : CIA-RDP86M00886R000400030058-5
EXPANDED DEFENSE REVIEW (Sec. 10(g))
Should the Department of Defense' (DOD) review of national
security export licenses be expanded to include exports to
non-Communist destinations where there may be risk of diversion?
Background
Under Section 10(g) of the current Export Administration Act
(EAA), DOD has the right to review any proposed export of any
national security goods or technology to any country to which
exports are controlled for national security purposes. In
general, only license applications for Warsaw Pact countries and
the Peoples Republic of China have been referred to DOD.
However, the EAA does not prohibit DOD review of any license
application which may be referred from Commerce. The question of
expanding DOD review to include shipments to non-Communist
destinations results from concerns that tightened controls over
direct exports to Communist countries has increased the incentive
to divert to Communist countries shipments intended for friendly
destinations.
When the Administration's position on renewal of the EAA was
prepared last spring, it was agreed that the Administration would
oppose legislative change and that DOD and the Department of
Commerce (DOC) would seek to resolve this issue administratively.
The two departments appeared to be close to signing a Memorandum
of Understanding (MOU) last June that would allow expanded DOD
review of particularly sensitive categories of exports to certain
free-world destinations. However, agreement was not reached on
whether DOD should review requests for multiple shipment
licenses. These bulk licenses enable shipments of a broad range
of authorized commodities to approved consignees (of whom there
are 22,000). This license category facilitates trade to COCOM
and other friendly countries.
Legislative Status
Senate Bill (S. 979) -- Expands DOD clear right to review to
include proposed exports of militarily critical goods or
technology to free world destinations where the Secretary of
Defense, in consultation with the Secretary of Commerce,
determines that there is a clear risk that those exports may be
diverted to proscribed destinations. This bill has been reported
out by committee and is awaiting floor action.
House Bill (H.R. 3231) -- Makes no change to current law. The
bill has been passed by the full House.
 Options
1. As agreed in the draft MOO, expand DOD's review to include
individual license a lications to ex ort s eciftic
commodities to selected free-world countries which Defense
and Commerce determine pose a high risk of diversion. DOD
would not review multiple license applications. Commerce
would undertake its own annual review and report to the ACEP.
Pros:
o Could increase capacity to prevent'diversions.
o Would likely preempt legislatively imposed solution.
o Would cause some increased burden on licensing system
due to DOD's expanded review from approximately 5,000
cases to 11,000 cases (out of a universe of 90,000
licenses issued annually).
o Could cause delays for U.S. exporters (although most
acceptable option to business interests).
2. In addition to the increased DOD role provided in Option 1,
create an interagency process for reviewin the multi le
license process and recommending any changes necessary to
minimize diversion. The interagency Advisory Committee on
Export Policy (ACED), chaired by Commerce, could create a
Standing Subcommittee on Multiple Licenses, comprised of
representatives of Commerce, Defense and State, to:
o Conduct an annual audit of the multiple license program,
and
.0 Report to the ACED its findings and recommendations
concerning necessary steps to minimize the risk of
diversion through the multiple license program.
This Subcommittee's annual review would examine: 1) criteria
for evaluating applications for multiple licenses, 2)
coverage of commodities eligible for multiple licenses, 3)
the adequacy of information in the licensing base, and 4)
ways to insure that this information is disseminated to
appropriate agencies for investigative purposes. This
Subcommittee could also be charged with developing
appropriate exemptions to multiple licenses to prevent
licensing to countries or importers where there is a
reasonable suspicion of diversion.
 o Would be more likely than Option 1 to preempt
congressional attempts to resolve the issue of multiple
licenses.
o A permanent arrangement could facilitate interagency
cooperation and coordination on these issues.
0 Because changes to the multiple licensing system would
not be immediate, this option is less likely than option
3 to satisfy congressional supporters of a tighter
licensing system.
o Commerce objects to an interagency review of one of its
programs, since it has offered in Option 1 to undertake
its own annual review and to report to the ACEP.
3. In addition to increased DOD re lole rovided in option 1, allow
eview of selected
DOD r multi license aID2 lications. This
would provide DOD with discretion to review multiple license
applications for exports of goods and militarily critical
commodities to free world destinations. Under this option,
DOD would have authorit to review multi le shipment
licenses.
Of all options:
Pros:
o Most likely to preempt legislatively imposed remedy.
0 Could provide greatest assurance that diversion is
minimized.
Of all options:
Cons:
0 Would likely further increase burden on licensing
system.
0 Would be most strongly opposed by U.S. exporters.