Tokenism for CTBT

The pruning of the Entities List by the United States will have minimal impact on Indian research and development.

FOR the Government and the proponents within the strategic community of India signing the Comprehensive Test Ban Treaty (CTBT), the announcement by the United States Department of Commerce (DoC) on December 15 that it will remove 51 entities from the lis t of entities in whose case the sanctions slapped on India following the Pokhran-II tests of May 1998 applied, could not have come at a better time. Observers feel that the Indian Government may well have indicated to the U.S. administration that a move of this nature would facilitate the attempted political consensus at home. Expectedly, both the Ministry of External Affairs (MEA) and the lobbying strategists have called the U.S. action a "movement in the right direction".

However, a close look at the announcement indicates that the "movement" does not amount to much.

In the December 15 list, there are actually 52 entities. The difference of one is merely technical; it arises because only two units - the ones at Hardwar and at Ranipet - of Bharat Heavy Electricals Ltd (BHEL) have been removed, and not all its units, a nd BHEL as an entity is still on the Entities List (E.L.). As for BHEL, therefore, the U.S. Bureau of Export Administration (BXA) has termed it a "revision" and not a "removal". The changes in the sanctions will take effect after the relevant Federal Reg ister Notification.

Consider the way the announcement is worded: "Removal of the entities will make it easier for them to obtain U.S. goods and technology - especially non-sensitive products that ordinarily do not require an export licence for India. The U.S. policy of deni al for dual-use items controlled for nuclear and missile technology reasons to all Indian and Pakistani entities remains unchanged, however... Today's action involves no changes in the items subject to sanctions - which includes many routine items - for entities remaining on the list."

The BXA controls the export of dual-use technology and items on essentially the following considerations: (a) National Security (N.S.); (b) Missile Technology (M.T.); (c) Nuclear Proliferation (N.P.); (d) Chemical and Biological (C.B.) Weapons; and (e) A nti-terrorism (A.T.), Crime Control (C.C.), Regional Stability, Short Supply, U.N. Sanctions and so on. These items are classified into 10 categories in the Commerce Control List (CCL), wherein each item carries a classification number, the ECCN number. There is, however, a class of items called EAR99 items. The classification EAR99 is used for a "basket" of simple and routine items - non-sensitive, non-strategic and non dual-use, and available freely from other parts of the world, including India - whi ch are not listed in the CCL. These are normally classified as "No Licence Required (NLR)" items. However, this category is still subject to the Export Administration Regulations (EAR).

Now, according to the DoC announcement, N.P.- and M.T.-related denials will continue to be in place for all entities, including the ones that have been removed. This would mean that in principle only dual-use items controlled for reasons other than M.T. and N.P. may become available against an export licence of the DoC. More significantly, this apparent removal of sanctions on 51 entities will only enable them to import easily NLR items belonging to the EAR99 category.

Out of 413 entries in the CCL, only 207 are controlled for reasons other than M.T. and N.P. Of these, 85 are controlled for N.S., 13 for C.B. and 109 for other reasons. This means that 206 items are controlled for N.P. and M.T. reasons. That is, even now , roughly 50 per cent of the CCL items for dual use will be denied to these 51 entities. Prior to the December 15 notification, there was a "presumption of denial" for all items controlled for reasons other than M.T. and N.P. The present move, however, d oes not mean a "presumption of approval". It only implies that any licence application for import of these items by any of the 51 entities will be considered on a case-by-case basis and a subsequent denial is not ruled out. Only EAR99 items, denied earli er, will probably be permitted to these entities.

A look at the export licences for India issued by the DoC since 1995 showed that the greatest fraction of applications was for EAR99 items. Among the dual-use items - perhaps because of the already existing M.T. and N.P. controls - the largest fractions of approvals were for C.B.- and N.S.-controlled items. But M.T./N.P.-controlled items constituted about 15 per cent of the total licensed imports. These would continue to be denied.

Also, in the last couple of years, encryption and information security-related technologies and equipment constituted a major fraction of the N.S-controlled items that had been approved for export. This sudden increase in import of encryption items was e ssentially owing to a relaxation in the export of these products by the U.S. Government and the expected increase in Internet and related services such as e-commerce, largely by private companies which do not figure in the sanctions list in any case. The other substantive fraction was for C.B-controlled items. As regards the 51 entities, N.S- and C.B.-controlled items would move from a "presumption of denial" status to a "case-by-case review" status, with denial still a possibility.

WHAT is most striking in the so-called relaxation is that none of the units of the Indian Space Research Organisation (ISRO), including the Physical Research Laboratory (PRL), Ahmedabad, a basic research institution, has been taken off the E.L. That is, none of the sanctions against ISRO has been lifted. Interestingly, the same cannot be said even of the Department of Atomic Energy (DAE). All the basic research institutions under the DAE have been removed from the list.

The list shows that as many as 28 of the 51 entities are ordnance factories under the Department of Defence Production and Supplies, many of which should not have been on the list in the first place. There are 43 ordnance factories and related units on t he E.L. Of these, 15 continue to be under sanctions. But an interesting point is that the sanctions were less severe on the ordnance factories than on other units in the sense that EAR99 items were not embargoed for them. Since EAR99 items constitute the bulk of imports by the ordnance factories, the impact of the relaxation is going to be marginal.

The same would hold good for some units of the Defence Research and Development Organisation (DRDO) such as the Combat Vehicle Research and Development Establishment (CVRDE) that have been removed from the list. They can now apply for the import of EAR99 and N.S./C.B.-controlled items. Significantly, however, DRDO units such as the Aeronautical Development Establ-ishment (ADE), the Aeronautical Devel-opment Agency (ADA) and the Gas Turbine Research Establishment (GTRE), which are involved in the Light C ombat Aircraft (LCA) project, still face sanctions. This means that the flight control system, which had been sent to the U.S. for testing, will not be received back because of re-export controls that came into force with the sanctions. Similarly, produc tion units such as Bharat Electronics Ltd. (BEL) and Hindustan Aeronautics Ltd (HAL) under the Ministry of Defence continue to be on the list. Even EAR99 items will be denied to them.

The DoC notification states that the move is in keeping with the recent "sense of Congress", expressed in the FY 2000 Defence Appropriations Act, that the original list of over 200 entities was too broad and required refinement. According to the DoC stat ement, "the action is based on a consensus decision by the Administration to more tightly focus the sanctions on those Indian entities most directly involved in proliferation activities of concern." The pruned list, however, hardly meets this criterion. Besides many parastatals and military establishments, 40-odd private enterprises, such as Godrej and Boyce, Larsen & Toubro Ltd., Ferrodite Private Ltd. and Kirloskar Ltd, which are not involved in nuclear or missile programmes, are still on the E.L. It is these entities which would import a good deal of controlled items, including EAR99 items. Even the aerospace divisions of the Indian Institute of Technology (IIT), Chennai, IIT, Mumbai, and the Indian Institute of Science (IISc), Bangalore, and organi sations such as the Centre for Development of Advanced Computing (C-DAC) continue to be under sanctions even in the case of EAR99 items, let alone controlled dual-use items.

The only real beneficiaries of the latest move would be the academic institutions under the DAE, such as the Tata Institute of Fundamental Research (TIFR), Mumbai, the Saha Institute of Nuclear Physics, Calcutta, the Institute of Mathematical Sciences (I MSc), Chennai, and the Inter-University/DAE consortium laboratories. Research in these organisations seems to have suffered mainly because of the non-availability of replacement parts, maintenance services and high performance computer (HPC) systems and components, for which exports had been licensed and payments made before May 1998.

Now all that can be said consequent to their removal from the list is that while EAR99 items will become available, import of other items can be done through the BXA. If such items are controlled only for reasons other than M.T. and N.P., the application s will be considered on a case-by-case basis and may be approved or rejected . As regards HPC systems, separate HPC controls and regulations apply. At present, for entities covered by the sanctions licence is required for performance above 2,000 Million Theoretical Operations Per Second (MTOPS) with, however, a presumption of denial. For entities that do not come under the sanctions, including those who have been removed from the list, civilian users do not require a licence up to 7,000 MTOPS whereas de fence entities require a licence above 2,000 MTOPS.

The real impact of the U.S. action on Indian research and development and industry will be minimal. What it might result in is that it will make it easy for the European subsidiaries of U.S. firms to supply parts and spares that had otherwise been embarg oed for N.S. reasons under re-export regulations. The pruning of the E.L. is not something to be euphoric about. Even the supporters of the CTBT should not regard this sufficient to facilitate the signing of the CTBT.