It is clear that the globalization of industrial production and software development is in the nature of manufacturing and finance. But business and financial institutions are careful to ensure that they are taking prudent risks in their decisions to cooperate overseas, to make loans, or to share intellectual property. The same sort of caution must be exercised by the U.S. and its allies when decisions are made on the sale or export of arms and militarily critical technologies.

Let me give a few examples of poor risks. After a lengthy investigation in the United States and in Europe during the mid-1980s, we discovered that the design documents for both the Stinger air defense missile system and another NATO-shared naval missile system were compromised to the Soviet Union. The design documents for these systems were shared by the United States with European companies because they were part of an attempt at globalization. Suffice it to say that it was the very practice of co-production that created a system of weak links that was penetrated by the KGB.

That took place at a time when there was a commonly agreed threat, and when a system was in place among the NATO countries and Japan to control the release of technology. Today, an agreed-upon system of controls, such as COCOM, no longer exists, and the Wassenaar Arrangement, as a registry of exports, is no substitute for a rigorous examination of which technologies should be controlled.

The export licensing system for U.S. munitions list items, both for technology and arms sales, is an arrangement that favors national security. In this system, the Department of State has insisted on affirmative support from the Department of Defense and the intelligence community before proceeding with any export license. Within the Congress, the Senate Foreign Relations and House International Relations Committees have provided a final sanity check for exports over a certain dollar amount. But items have eased their way under this threshold and have been reverse engineered.

This munitions list process takes into account the need for timely approvals, but it is nevertheless structured to ensure thorough vetting and review of any export. This careful, layered process has minimized breakdowns, in contrast with the far more lax process of export approval under the Commodity Control List, which controls items that have dual uses (military and civilian).

In contrast, we have learned how the relaxation and liberalization of our export control policies on certain dual-use technologies--for instance, satellites--particularly the transfer of export licensing authority during the Clinton Administration from the State Department to the Commerce Department, led to improvements by China in missile systems that can now hit the United States with multiple warheads and improved accuracy. It is this error that led to the return of licensing authority to the Department of State. Notwithstanding all of the pressure to move more quickly on licensing decisions, and the desire of the Administration to take part in "globalization," the United States should move carefully.

Congress has an oversight responsibility in this process that must be recognized. However the licensing systems may be revised, some means must be built in to ensure that the representatives of the American people exercise their responsibilities for America's national security. Any new export licensing system, whether for dual-use items or for munitions list items, should be subject to prudent oversight by the congressional committees which historically have provided the final review for technology transfers.

These are serious matters that involve the lives of American military men and women. It is easy to understand why our allies and friends protest the application of our export regulations to them, but America's allies and friends must understand that some of their export decisions and practices affect the United States. Moreover, technology and weapon systems can be re-exported.

A CASE STUDY: CHINA

Consider, for example, that China will develop an airborne early warning and control radar system with the technological assistance of Israel, a strong American ally and security partner. These AWACS-like aircraft, when they become operational, may serve as a command-and-control platform for aircraft capable of launching missiles developed with the assistance of other U.S. allies. Such a system of command, control, early warning, and high-tech weapons will certainly be used to deter attempts by the United States to maintain the peace and stability of the Western Pacific should China carry out its threats to use force against Taiwan. The systems could also be used to affect the control of the islands in the South China Sea.

The same situation exists with respect to China's air-to-air refueling systems, which also are being developed with the assistance of one of the strongest allies of the United States, Great Britain. None of the nations involved in these sales and exports have forces or vital interests in the Asia-Pacific region, but these exports have a direct effect on the United States and some of its traditional friends and allies.

Moreover, given China's track record of reverse engineering and re-exporting, some of the systems eventually may end up in countries like Iran, which remains a potential threat to U.S. forces. For example, China was sold two AN/TPQ-37 Firefinder artillery locating radar sets by the United States in 1988. Within a year of their delivery, Beijing had cloned them and marketed a similar radar system, the Type-704, at a major arms exhibition in China. China also bought French Exocet cruise missiles. Within a few years these were reverse-engineered and sold to Iran as the C-801 Silkworm. Chinese Type-69 Main Battle Tanks were equipped with illegally acquired laser range-finders that closely resembled American equipment. Between 100 and 200 of these tanks ended up in Iraq.

CONCLUSION

The point is not to castigate America's alliance partners and friends, who, we recognize, pursue their own national interests. It is to emphasize that we need to forge a common policy. However, in the absence of commonly agreed-upon export standards and an established consultative mechanism, like the old COCOM, national security decisions on strategic trade and exports made in Washington must be based on the interests of the United States, which has its forces deployed securing peace in some places where some allies do not. American security and the safety of America's forces cannot be globalized.

Dr. Larry M. Wortzel is Director of The Asian Studies Center at The Heritage Foundation. This paper is adapted from remarks delivered at the 1999 Common Defense (COMDEF) Conference on Defense Cooperation in an Era of Globalization, held at the National Press Club in Washington, D.C., on November 9, 1999.