U.S. fighter aircraft have the ability to outlast and outperform other foreign-built aircraft, which translates into a significant combat advantage over possible adversaries. To protect national security interests, Defense officials review applications referred by State to determine whether the export would undermine the U.S. lead in hot section technology and, consequently, U.S. air superiority.Defense and State have not approved the export of the most advanced hot section technology for either military or commercial use, although certain exports have been allowed under government-to-government agreements with U.S. allies that restrict transfer beyond the government. This argument reflects the view that all dual-use items should be subject to export control under Commerce’s licensing system because most applications of these items are commercial. Industry Supports the Change in Jurisdiction

Manufacturers of jet engines and communications satellites we talked with support the transfer of the items to the Commerce Control List. Commerce’s and State’s Licensing Systems Differ

State and Commerce implement different laws to control exports of military and dual-use items. State has broad authority to deny a license, and it can deny simply with the explanation that it is against U.S. national security or foreign policy interests. Items Transfer to Commerce Licensing Jurisdiction

In October and November 1996, Commerce and State published changes to their respective regulations transferring licensing jurisdiction for commercial jet engine hot section technology and commercial communications satellites to Commerce. National security controls have been focused on preventing exports to certain destinations. A new “significant item” control will be created for these two items. Although most foreign policy controls define specific and limited policy objectives, the policy objective for this control—consistency with U.S. national security and foreign policy interests—is broadly stated. Implications of Change Are Uncertain

These regulatory and procedural changes are intended to allow Commerce to control and deny, when appropriate, exports of the two items to all destinations. State approved exports of commercial communications satellites with conditions on the safeguard of the satellite and associated technology. According to Commerce and other executive branch officials, the change in jurisdiction is not intended to change U.S. licensing policy—what destinations and end users the United States will approve licenses for—but only the procedures under which licensing decisions will be made. These differences in the underlying basis for decisions create uncertainty as to whether the changed procedures for making licensing decisions will result in changes in licensing policy. It was only after Commerce appealed the Secretary of State’s decision to the President, and the President decided to transfer jurisdiction for both commercial communications satellites and commercial jet engine hot section technology to the Department of Commerce that unanimous support for the transfer of jurisdiction came about. To determine the executive branch’s rationale for the change in licensing jurisdiction, we interviewed officials at Commerce and State.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the implications of changing export licensing jurisdiction for two sensitive dual use items from the Department of State to the Department of Commerce, focusing on: (1) the military sensitivity of the two items; (2) the executive branch's rationale for the change in jurisdiction; (3) the licensing systems that the two departments use to control exports; and (4) proposed changes in Commerce controls for these two items.

What GAO Found

GAO found that: (1) the items transferred to Commerce control, commercial jet engine hot section technology and commercial communications satellites, are militarily sensitive items; (2) hot section technology gives U.S. fighter aircraft the ability to outlast and outperform other aircraft, a key element in achieving air superiority; (3) because of the military significance of this technology, State does not allow the export of the most advanced hot section technology for either military or commercial use; (4) commercial communications satellites being transferred to Commerce jurisdiction contain militarily sensitive characteristics; (5) State has approved the export of commercial communications satellites for foreign launch with conditions for safeguarding sensitive technologies for certain destinations such as China; (6) the executive branch's decision to transfer licensing jurisdiction reflects Commerce's position that all hot section technology and communications satellites for commercial use should be under Commerce jurisdiction; (7) transferring jurisdiction also makes U.S. national controls for these items consistent with international trade commitments to control them as dual use items; (8) State has broad authority to deny a license, and it can deny simply with the explanation that it is against U.S. national security or foreign policy interests; (9) jet engine and satellite manufacturers support the change in jurisdiction, viewing the Commerce system as more responsive to the needs of business; (10) the state and Commerce export control systems differ; (11) Commerce controls items to achieve specific national security and foreign policy objectives; (12) national security controls are aimed at preventing items from reaching certain destinations such as China and Russia; (13) foreign policy controls are aimed at achieving specific objectives, including antiterrorism, regional stability, and nonproliferation; (14) in recognition of the military sensitivity of these items, Commerce is implementing new and expanded control procedures; (15) these new control procedures are intended to allow Commerce to control and deny, where appropriate, exports of the two items to all destinations; (16) according to Commerce and other executive branch officials, the change in jurisdiction is not intended to change U.S. licensing policy, but it is intended only to change the procedures under which licensing decisions will be made; and (17) these differences in the underlying basis for decisions create uncertainty as to whether the changed procedures for making licensing decisions will result in changes in licensing policy.