Commerce may conduct a PSV check on any controlled item it  licenses that is exported from the United States. During  fiscal years 2000 to 2002, Commerce approved 70 percent of the license  applications it received for exports of dual-use items to countries of  concern. Commerce Approves Most Dual-Use Export Licenses to Countries of Concern

Between 2000 and 2002, Commerce approved 70 percent of dual-use export  licenses to countries of concern—a total of 7,680 licenses for exports to  China, India, Israel, Russia, and others. 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 verify  whether exported items are being used as intended. Third, PSV results have  only a limited impact on future licensing decisions. Companies receiving  an unfavorable PSV will be subject to greater scrutiny in the future but can  still obtain an export license. Additionally, according to Commerce  officials, past PSV results play only a minor role in future enforcement  actions. The agents rated 57 (55 percent) of these checks favorable; that is, the item  had arrived at its intended destination and was being used for the purposes  stated in the license, although the agents did not visit the end user. However, during fiscal years 2000 to 2002, Commerce only  checked 6 percent of dual-use licenses for countries of concern. Scope and Methodology

We were asked to (1) assess the number of dual-use export licenses  approved and subject to post-shipment verification (PSV), and (2) evaluate  how the PSV process ensures that sensitive exports are used as intended.
Why GAO Did This Study

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.

What GAO Found

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.