China Daily is a great source of unintentional humor, and I really wish I had more time to peruse it. I did stumble across a recent opinion piece in China Daily on the rare earth export issue and, not surprisingly, there is much to snicker about in it, unless, of course, your business depends on the availabilities of the lanthanides, known to us non-technical sorts as the rare earth elements.

China initially justified its restrictions on exports of the lanthanides as a measure to encourage companies using lanthanides to relocate to China. Article XI of the General Agreement on Trade and Tariffs generally prohibits export quotas unless they fall within the exceptions set forth in Section 2 of Article XI or Article XX. Not surprisingly, efforts to distort international trade by forcing companies to relocate to the country imposing the quota is not within the exceptions set forth in GATT.

Somewhat later China began to cite the environmental impact of rare earth mining as a justification for the quotas. That argument was easily dismissed as a transparent ruse because China imposed no restrictions on rare earth mining for domestic use, no matter how loudly they complained the foreign exports of rare earths were killing Chinese workers.

Now, the article referenced by this post attempts to concoct another justification for its export quotas: national security. The article starts with a slam at the Wassenaar Arrangement which it claims is some kind of anti-socialist conspiracy by capitalist Western nations and a broad-based justification for China to impose any export controls it can dream up:

Export regulation was originally introduced for security issues. After World War II, the United States and other countries established the Coordinating Committee for Multilateral Export Controls (COCOM) against socialist countries; its successor, in effect today, is the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

In recent years the restrictions have become ever tighter. On June 19, 2007, the US Ministry [sic] of Commerce listed more than 2,500 kinds of technologies, devices, and materials banned [sic] for export to China.

Those familiar with the 2007 rule cited by China Daily, may wonder where the author came up with the idea that 2,500 kinds of technologies were banned for export. The rule imposed certain new license requirements for dual use items destined for use by the Chinese military but did not ban those exports. There were bans on items controlled for nuclear proliferation, missile technology, or chemical and biological warfare that would contribute to major Chinese weapons systems, but the 2,500 number is more than a little high as an estimate of the number of technologies involved.

More importantly, China’s claim that these restrictions are premised on national security would be more convincing if it had been its initial justification. And, of course, the Wassenaar list, which represents not a capitalist conspiracy but a multilateral consensus of strategic goods that require export controls, would permit China to exert export controls on the items on that list, items that don’t include the lanthanides.

According to one of the Wikileak cables published by the Guardian, Armenia, in 2003, sold machine guns and rockets to Iran which were later used in a fatal attack on U.S. forces in Iraq by Shia militants. Secretary Rice discussed this with Armenian President Serzh Sarkisian, who denied any involvement in the arms transfer.

In December 2008 the State Department sent a letter to Sarkisian threatening U.S. sanctions on Armenia unless Armenia signed a written agreement that it would undertake certain specified steps to prevent further arms transfers to Iran or other terrorist states. Those steps were to include:

• Adopt the Wassenaar Arrangement control lists
• Ensure that Armenian-based brokers aren’t involved in arms transfers
• Accept periodic unannounced inspections by the United States
• Consult with the United States on all arms transfers to countries that are not members of NATO, the E.U., or the Wassenaar Arrangement.

There is no indication that Armenia entered into such an agreement other than, of course, the absence of current U.S. sanctions against Armenia.

You may wonder why such a large fine for nickel powder. Well there is a partial answer to that, and the hint to the answer is the picture of the Oak Ridge gaseous diffusion uranium enrichment facility that illustrates this post. Gaseous diffusion enrichment requires a barrier that is used to separate isotopes of uranium, the goal being an output of fissionable uranium such as U-235. Apparently sintered nickel powder serves this purpose well. Sintered powder is powder that has been formed into a mass by high temperature and pressure alone without melting the powder. After this process, nickel creates a solid porous structure that permits the right isotopes to pass through and the others to stay behind, although it requires a multi-step cascading procedure. Sintered nickel powder was used as such a barrier in the gaseous diffusion plant at Oak Ridge.

Barrier technologies are, naturally, classified. But the description of ECCN 1C240.a probably gives a potential nuclear proliferator a good head start in developing a sintered nickel powder barrier. To be controlled under that ECCN, the nickel powder must be 99.0% pure and must have a mean particle size of less than 10 micrometers. I didn’t check each of the Novamet nickel powder exports alleged by BIS but five of them involved Novamet’s 4SP-10 powder, which judging from this specification sheet falls well within the parameters of ECCN 1C240.a.

That being said, and with requisite acknowledgment that this product could be used in uranium enrichment, there is certainly a foreign availability issue to consider here. The U.S. doesn’t mine or produce significant quantities of nickel. Russia is the largest producer, followed by Canada, Australia, and Indonesia. And nickel powder isn’t controlled under the Wassenaar Arrangement meaning that these countries can freely export nickel powder meeting the specifications described in ECCN 1C240.a. So, a $700,000 fine against Novamet seems far in excess of any injury that the exports might have caused.

UPDATE: Ed Fox, from DOE’s NNSA, points out in the comments that nickel powder is controlled by the Nuclear Suppliers Group. Indeed, it is listed on that group’s Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Materials, Software, and Related Technology under Category 2.C.16.a. That would prevent exports by Russia, Canada and Australia of nickel powder to certain countries. Singapore, another major producer of nickel, however, is not a member of the Nuclear Suppliers Group, although I can’t determine whether it has manufacturers who export nickel powder.

[P.S. The brief I mentioned earlier as my excuse for not posting more has been filed, so I should be on a more regular posting schedule.]

First, we should consider eliminating certain dual-use export license requirements for allies and partner nations — consistent with statutory and international obligations.

Of course, the rub here is what is meant by “consistent with . . . international obligations”? Obviously, this is a reference to the Wassenaar Arrangement, under which the United States has agreed to impose export controls on items on the “Lists of Dual-Use Goods and Technologies” made a part of that arrangement. But, as made clear in the 2006 “Best Practices Guidelines for the Licensing of Items on the Basic List and Sensitive List of Dual-Use Goods and Technologies,” members of the Arrangement are free to establish general licenses or license exceptions which permit the unlimited export of specified goods on the lists to specified destinations. The Guidelines, however, state that the member state should still require companies exporting under those general licenses or license exceptions to keep sufficient records of these exports to permit verification that any terms and conditions of the general licenses or license exceptions have been complied with.

Second, I’ve asked BIS to explore implementing a fast-track process for the review of dual-use export licenses for other key countries that do not pose a significant threat and have a strong history of export control compliance.

This is a laudable goal in theory that may be difficult to achieve in practice. Often the imposition of tighter deadlines for licensing decisions results in more applications being returned without action for minor errors — errors that would previously have been ignored — just so that the licensing officer can stay within the required time frame. That certainly seems to have been the result of the shortened processing guidelines for commodity jurisdiction requests filed with the Directorate of Defense Trade Controls.

And, of course we will continue to scour the Export Administration Regulations and de-list those items and technologies that no longer pose a threat to national security.

Here the Wassenaar Arrangement may prove to be somewhat more of an obstacle. Under the Arrangement, the United States is obligated to control the export of items on the Wassenaar Lists and the overwhelming number of commodities on the Commerce Control List (“CCL”) are also on the Wassenaar Lists. The United States can only really remove those common items from the CCL if it convinces other Wassenaar members to remove the same items from the Wassenaar lists at one of the plenary sessions held under the Arrangement.

Of course, there are all those items in Category 0 of the CCL that aren’t on the Wassenaar Lists, so we can look forward, perhaps, to the immediate removal of “horses by sea” (ECCN 0A980) and “plastic handcuffs” (ECCN 0A982), otherwise known as plastic cable ties, from the CCL.

Passive Coherent Location systems or equipment specially designed for detecting and tracking moving objects by measuring reflections of ambient radio frequency emissions, supplied by non-radar transmitters.

Passive coherent location systems are more commonly known as passive radar systems. Unlike conventional radar which relies on a radio signal transmitted by the radar system, a passive radar system uses radio signals by other existing transmission sources, typically television and radio stations. Lockheed Martin’s Silent Sentry is a passive radar system which Lockheed began to sell in 1999.

As receiving equipment and the necessary signal processing equipment have become smaller, cheaper and more powerful, passive radar represents a highly-mobile, extremely sensitive and almost completely covert method for tracking moving objects such as airplanes and helicopters. Moreover, passive radar systems can detect low-flying stealth aircraft.

Frankly, we are a little surprised that it took this long for such a technology to wind up on an export control list.

The revised list includes a new category 1.C.5.c which covers composite conductors consisting of one or more “superconductive” filaments which remain “superconductive” above 115 K (-158.16oC). Materials that exhibit superconductivity at temperatures over 90 K (-183°C) are traditionally considered high-temperature superconductors. This, of course, leads to the joke that no physicist can resist when writing about high-temperature superconductors that “high temperatures are relative.” Now you know why MIT is not a hotbed of stand-up comedy.

This is all very interesting, you say, but where’s the dual-use? Normally superconductivity is considered useful for magnetic effects (MRIs and floating trains and the like) and efficient energy transmission, none of which seem to have significant military application. However, this interesting article from RF Design Magazine describes at least one significant military application of HTS materials in military surveillance electronics. Short version: superconductors allow filters that will reject side-band frequencies without reducing frequency strength thereby vastly extending the range of surveillance receivers. Which is one of the reason why even high-temperature superconductors are cool.

(Rimshot. “Thank You. You’ve been great. Be sure to try the veal.”)

According to a news item in today’s Korea Times, Lee Tae Yong, the President of Daewoo International, was indicted by South Korea for illegal exports of military items to Myanmar (Burma). The indictment of the Daewoo chief was one of a group of multiple indictments which included indictments of seven companies and fourteen officials from those companies.

The indictment alleged the export of production facilities and weapons technology to Myanmar in violation of the law on exports of strategic goods. According to the prosecutor for the case, the companies had “made contracts with Myanmar to export plant facilities, machines and technology information which can be used to make various cannon weapons.” Apparently before the companies and officials were collared by Korean authorities, 90 percent of the weapons-making facilities had been completed and 90 percent of contract funds had been dispensed to the Korean companies.

South Korea is part of the Wassenaar Arrangement pursuant to which it is committed to restrict exports of military and dual-use items.

The South Korean authorities could have obtained their first hints of the illegal exports of Daewoo through a simple Internet search. On February 6, 2002, Mr. Lee visited the Myanmar Ministry of Defense. His visit was captured by Myanmar Television, and a picture (shown above) and a report of that visit were printed in The New Light of Myanmar, the official newspaper of the Myanmar government. That New Light news story and photograph were then made available on the government’s website. Next time Mr. Lee attempts to become an international arms dealer for sanctioned regimes, he might want to make his official visits to his customers a little more surreptitiously.

Today BIS finally got around to issuing a rule incorporating those changes into the CCL. As a result, a number of ECCNs have been modified, changed and added.

One of the key additions is ECCN 5A002.a.9 which covers “quantum cryptography.” Quantum cryptography is a relatively new technology which relies on principals of quantum physics to set up a secure communications channel. Information is encoded into quantum properties of photons and then transmitted. If any party other than the sender and recipient intercepts or reads the communication it alters the photons in detectable ways. Although there are not yet any significant commercial implementations of quantum cryptography it is thought that it could be used as a secure mechanism to distribute keys used in digital cryptography.

Under the new rules, quantum cryptography is treated identically with other forms of cryptography and is eligible for export under the procedures set forth in License Exception ENC. Thus, for example, quantum cryptography devices could be shipped to the “license-free zone” — basically the European Union plus Australia, New Zealand and Japan — immediately upon filing for review.

Another new addition to CCL are underwater electronic field sensors which are now classified under ECCN 6A006.b. These have typically been designed for military use and were listed on the U.S.M.L. at Category XI(b), but since such devices are now being manufactured for civilian uses as well, the new ECCN for dual-use versions was added. Under the new ECCN the underwater sensors would be subject to control if they have “a ‘noise level’ (sensitivity) lower (better) than 8 nanovolt per meter per square root Hz when measured at 1 Hz.”

One deletion implemented by the new rules illustrates the difficulty that both the CCL and the Wassenaar Lists have in keeping up with the increasing availability to consumers of technologies that once were out of their reach. ECCN 8A002.f and its Wassenaar list analog 8.a.2.f provided for the control of:

Electronic imaging systems, specially designed or modified for underwater use, capable of storing digitally more than 50 exposed images

Clearly inexpensive digital underwater cameras that would be covered by this classification have become broadly available throughout the world. So a decontrol note was added to the CCL and the Wassenaar lists to exclude from control “digital cameras specially designed for consumer purposes, other than those employing electronic image multiplication techniques.” One can only wonder how many digital underwater cameras were illegally exported prior to the adoption of this decontrol note.